Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 25, 2019 | Jun. 30, 2018 | |
Entity Registrant Name | SOLARIS OILFIELD INFRASTRUCTURE, INC. | ||
Entity Central Index Key | 1,697,500 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 373,490,556 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Class A Common Stock | |||
Entity Common Stock, Shares Outstanding | 27,884,860 | ||
Class B Common Stock | |||
Entity Common Stock, Shares Outstanding | 19,243,718 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash | $ 25,057 | $ 63,421 |
Accounts receivable, net | 39,746 | 12,979 |
Prepaid expenses and other current assets | 5,492 | 3,622 |
Inventories | 10,470 | 7,532 |
Total current assets | 80,765 | 87,554 |
Property, plant and equipment, net | 296,538 | 151,163 |
Goodwill | 17,236 | 17,236 |
Intangible assets, net | 4,540 | 5,335 |
Deferred tax assets | 24,624 | 25,512 |
Other assets | 1,454 | 260 |
Total assets | 425,157 | 287,060 |
Current liabilities: | ||
Accounts payable | 9,127 | 5,000 |
Accrued liabilities | 12,658 | 15,468 |
Current portion of deferred revenue | 12,990 | |
Current portion of capital lease obligations | 35 | 33 |
Other current liabilities | 515 | |
Total current liabilities | 35,325 | 20,501 |
Senior secured credit facility | 13,000 | |
Deferred revenue, net of current portion | 12,468 | |
Capital lease obligations, net of current portion | 154 | 179 |
Payables related to Tax Receivable Agreement | 56,149 | 24,675 |
Other long-term liabilities | 633 | 145 |
Total liabilities | 117,729 | 45,500 |
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 | 126,347 | 121,727 |
Retained earnings | 43,317 | 3,636 |
Treasury stock (at cost), 91 shares and 16 shares as of December 31, 2018 and 2017, respectively | (1,414) | (261) |
Total stockholders' equity attributable to Solaris | 168,521 | 125,292 |
Non-controlling interest | 138,907 | 116,268 |
Total stockholders' equity | 307,428 | 241,560 |
Total liabilities and stockholders' equity | 425,157 | 287,060 |
Class A Common Stock | ||
Stockholders' equity: | ||
Common stock | 271 | 190 |
Class B Common Stock | ||
Stockholders' equity: | ||
Common stock |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, Authorized shares | 50,000,000 | 50,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Treasury stock (in shares) | 91,000 | 16,000 |
Class A Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 600,000,000 | 600,000,000 |
Common stock, shares issued | 27,091,000 | 19,026,000 |
Common stock, shares outstanding | 27,000,000 | 19,010,000 |
Class B Common Stock | ||
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized | 180,000,000 | 180,000,000 |
Common stock, shares issued | 19,627,000 | 26,811,000 |
Common stock, shares outstanding | 19,627,000 | 26,811,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Revenue: | ||||
Revenue | $ 197,196 | $ 67,395 | $ 18,157 | |
Operating costs and expenses: | ||||
Depreciation and amortization | 18,422 | 6,635 | 3,792 | |
Salaries, benefits and payroll taxes | [1] | 10,383 | 9,209 | 3,061 |
Selling, general and administrative (excluding $480, $340 and $250 of depreciation and amortization for the years ended December 31, 2018, 2017 and 2016, respectively, shown separately) | 6,375 | 5,077 | 2,096 | |
Other operating expenses | 1,827 | 4,126 | ||
Total operating costs and expenses | 97,909 | 41,934 | 15,296 | |
Operating income | 99,287 | 25,461 | 2,861 | |
Interest expense, net | (374) | (97) | (23) | |
Income pursuant to Tax Receivable Agreement | 23,022 | |||
Other expense | 8 | |||
Total other income (expense) | (374) | 22,925 | (15) | |
Income before income tax expense | 98,913 | 48,386 | 2,846 | |
Provision for income taxes | (12,961) | (25,899) | (43) | |
Net income | 85,952 | 22,487 | 2,803 | |
Less: net income related to Solaris LLC | (3,665) | (2,803) | ||
Less: net income related to non-controlling interests | (43,521) | (15,186) | ||
Net income attributable to Solaris | $ 42,431 | $ 3,636 | ||
Earnings per share of Class A common stock - basic (in dollars per share) | $ 1.60 | $ 0.28 | ||
Earnings per share of Class A common stock - diluted (in dollars per share) | $ 1.59 | $ 0.27 | ||
Basic weighted-average shares of Class A common stock outstanding (in shares) | 25,678 | 12,117 | ||
Diluted weighted-average shares of Class A common stock outstanding (in shares) | 25,829 | 12,482 | ||
System rental | ||||
Revenue: | ||||
Revenue | $ 143,646 | $ 54,653 | 14,594 | |
Operating costs and expenses: | ||||
Cost of revenue | [1] | 7,230 | 2,627 | 1,431 |
Depreciation and amortization | 14,920 | 5,792 | 3,352 | |
System services | ||||
Revenue: | ||||
Revenue | 43,010 | 12,537 | 3,563 | |
Operating costs and expenses: | ||||
Cost of revenue | [1] | 50,633 | 14,184 | 4,916 |
Depreciation and amortization | 1,274 | 461 | $ 160 | |
Transloading services | ||||
Revenue: | ||||
Revenue | 8,083 | |||
Operating costs and expenses: | ||||
Cost of revenue | [1] | 2,242 | 76 | |
Depreciation and amortization | 954 | |||
Inventory software services | ||||
Revenue: | ||||
Revenue | 2,457 | 205 | ||
Operating costs and expenses: | ||||
Cost of revenue | 797 | |||
Depreciation and amortization | $ 794 | $ 42 | ||
Class A Common Stock | ||||
Operating costs and expenses: | ||||
Earnings per share of Class A common stock - basic (in dollars per share) | [2] | $ 1.60 | $ 0.28 | |
Earnings per share of Class A common stock - diluted (in dollars per share) | [2] | $ 1.59 | $ 0.27 | |
Basic weighted-average shares of Class A common stock outstanding (in shares) | [2] | 25,678,000 | 12,117,000 | |
Diluted weighted-average shares of Class A common stock outstanding (in shares) | [2] | 25,829,000 | 12,482,000 | |
[1] | The consolidated statements of operations include stock-based compensation expense as follows:Cost of system rental$ 6$ —$ —Cost of system services 191 — —Cost of transloading services 3 — —Salaries, benefits and payroll taxes 3,661 3,701 127Stock-based compensation expense$ 3,861$ 3,701$ 127 | |||
[2] | Represents earnings per share of Class A common stock and weighted-average shares of Class A common stock outstanding for the period following the May 17, 2017 Initial Public Offering. |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Depreciation and amortization | $ 18,422 | $ 6,635 | $ 3,792 |
Stock-based compensation expense | 3,861 | 3,701 | 127 |
Selling, general and administrative expenses | |||
Depreciation and amortization | 480 | 340 | 250 |
Salaries, benefits and payroll taxes | |||
Stock-based compensation expense | 3,661 | 3,701 | 127 |
System rental | |||
Depreciation and amortization | 14,920 | 5,792 | 3,352 |
Stock-based compensation expense | 6 | ||
System services | |||
Depreciation and amortization | 1,274 | 461 | $ 160 |
Stock-based compensation expense | 191 | ||
Transloading services | |||
Depreciation and amortization | 954 | ||
Stock-based compensation expense | 3 | ||
Inventory software services | |||
Depreciation and amortization | $ 794 | $ 42 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ AND MEMBERS’ EQUITY - USD ($) $ in Thousands | Members' Equity | 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, 2015 | $ 67,468 | $ 67,468 | ||||||
Changes in Stockholders' Equity | ||||||||
Additional members’ equity related to accrued interest on notes receivable that were exchanged for membership units | 327 | 327 | ||||||
Accrued interest related to notes receivable that were exchanged for membership units | (327) | (327) | ||||||
Unit-based compensation expense | 127 | 127 | ||||||
Proceeds from pay down of promissory note related to membership units | 948 | 948 | ||||||
Net Income prior to the Reorganization | 2,803 | 2,803 | ||||||
Net income | 2,803 | |||||||
Balance at end of year at Dec. 31, 2016 | 71,346 | 71,346 | ||||||
Changes in Stockholders' Equity | ||||||||
Additional members’ equity related to accrued interest on notes receivable that were exchanged for membership units | 84 | 84 | ||||||
Accrued interest related to notes receivable that were exchanged for membership units | (84) | (84) | ||||||
Unit-based compensation expense | 43 | 43 | ||||||
Proceeds from pay down of promissory note related to membership units | 3,808 | 3,808 | ||||||
Net Income prior to the Reorganization | 3,665 | 3,665 | ||||||
Effect of the Reorganization | $ (78,862) | $ 101 | $ 77,256 | $ 125,056 | 123,551 | |||
Effect of the Reorganization (in shares) | 10,100,000 | 32,366,000 | ||||||
Deferred tax asset and payables related to parties pursuant to Tax Receivable Agreement from the Reorganization Transactions | (19,149) | (19,149) | ||||||
Effect of the November Offering | $ 81 | 66,352 | (21,969) | 44,464 | ||||
Effect of the November Offering (in shares) | 8,050,000 | (5,050,000) | ||||||
Deferred tax asset and payables related to parties pursuant to Tax Receivable Agreement from the November Offering | (12,928) | (12,928) | ||||||
Exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock | $ 8 | 1,997 | (2,005) | |||||
Exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock (in shares) | 785,000 | (785,000) | ||||||
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 | (2,755) | $ (2,755) | ||||||
Stock option exercises | 261 | $ (261) | ||||||
Stock option exercises (in shares) | 75,000 | 16,000 | 91,484 | |||||
Issuance of shares of Class B common stock in connection with the acquisition of the assets of Railtronix | 4,507 | $ 4,507 | ||||||
Issuance of shares of Class B common stock in connection with the acquisition of the assets of Railtronix (in shares) | 280,000 | |||||||
Stock-based compensation | 4,738 | 4,738 | ||||||
Additional members’ equity related to accrued interest on notes receivable that were exchanged for membership units subsequent to the Reorganization | 28 | 28 | ||||||
Accrued interest related to notes receivable that were exchanged for membership units subsequent to the Reorganization | (28) | (28) | ||||||
Proceeds from pay down of promissory note and interest related to membership units subsequent to the Reorganization | 1,448 | 1,448 | ||||||
Net income subsequent to the Reorganization | $ 3,636 | 15,186 | 18,822 | |||||
Net income | 22,487 | |||||||
Balance at end of year at Dec. 31, 2017 | $ 190 | 121,727 | 3,636 | $ (261) | 116,268 | 241,560 | ||
Balance at end of year (in shares) at Dec. 31, 2017 | 19,010,000 | 26,811,000 | 16,000 | |||||
Changes in Stockholders' Equity | ||||||||
Exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock | $ 72 | 17,869 | (17,941) | |||||
Exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock (in shares) | 7,184,000 | (7,184,000) | ||||||
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 | (20,118) | (20,118) | ||||||
Stock option exercises | $ 3 | 1,279 | $ (9) | (341) | $ 932 | |||
Stock option exercises (in shares) | 327,000 | 1,000 | 327,594 | |||||
Stock-based compensation | 4,901 | $ 4,901 | ||||||
Vesting of restricted stock | $ 6 | 629 | $ (1,144) | (637) | (1,146) | |||
Vesting of restricted stock (in shares) | 570,000 | 74,000 | ||||||
Other | 60 | 60 | ||||||
Solaris LLC distribution paid to Solaris LLC unitholders at $0.10 per Solaris LLC Unit | (1,963) | (1,963) | ||||||
Dividends paid ($0.10 per share of Class A common stock) | (2,750) | (2,750) | ||||||
Net income | 42,431 | 43,521 | 85,952 | |||||
Balance at end of year at Dec. 31, 2018 | $ 271 | $ 126,347 | $ 43,317 | $ (1,414) | $ 138,907 | $ 307,428 | ||
Balance at end of year (in shares) at Dec. 31, 2018 | 27,091,000 | 19,627,000 | 91,000 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ AND MEMBERS’ EQUITY (Parenthetical) - $ / shares | Dec. 27, 2018 | Dec. 31, 2018 |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ AND MEMBERS’ EQUITY | ||
Distributions paid to unit holders (in dollars per unit) | $ 0.10 | |
Cash dividends paid per share | $ 0.10 | $ 0.10 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities: | |||
Net income | $ 85,952 | $ 22,487 | $ 2,803 |
Adjustment to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 18,422 | 6,635 | 3,792 |
Loss on disposal of asset | 318 | 498 | |
Stock-based compensation | 3,861 | 3,701 | 127 |
Amortization of debt issuance costs | 296 | 51 | 4 |
Provision for bad debt | 131 | ||
Change in payables related to Tax Receivable Agreement | (23,022) | ||
Deferred income tax expense | 12,277 | 25,652 | |
Other | 620 | (28) | |
Changes in assets and liabilities: | |||
Accounts receivable | (26,766) | (8,469) | (3,065) |
Prepaid expenses and other assets | (686) | (3,273) | 109 |
Inventories | (10,470) | (7,532) | 327 |
Accounts payable | 4,469 | 4,224 | 41 |
Accrued liabilities | 2,614 | 5,805 | 252 |
Deferred revenue | 25,458 | ||
Net cash provided by operating activities | 116,365 | 26,729 | 4,521 |
Cash flows from investing activities: | |||
Investment in property, plant and equipment | (161,079) | (93,912) | (10,899) |
Cash paid for Railtronix acquisition | (5,000) | ||
Investment in intangible assets | (6) | (72) | (36) |
Cash received from insurance proceeds | 540 | ||
Net cash used in investing activities | (160,545) | (98,984) | (10,935) |
Cash flows from financing activities: | |||
Payments under capital leases | (28) | (27) | (25) |
Payments under insurance premium financing | (1,275) | ||
Payments under notes payable | (451) | (211) | |
Proceeds from stock option exercises | 932 | ||
Payments related to purchase of treasury stock | (1,146) | ||
Proceeds from borrowings under the senior secured credit facility | 13,000 | 3,000 | 2,500 |
Repayment of senior secured credit facility | (5,500) | ||
Payments related to debt issuance costs | (1,014) | (111) | (153) |
Proceeds from issuance of Class A common stock sold in initial public offering, net of offering costs | 111,075 | ||
Proceeds from issuance of Class A common stock sold in November Offering, net of offering costs | 44,684 | ||
Proceeds from members’ contributions | 948 | ||
Distributions paid to unitholders | (25,818) | ||
Proceeds from pay down of promissory note related to membership units | 5,256 | ||
Distribution and dividend paid to Solaris LLC unitholders and Class A common shareholders | (4,713) | ||
Other | 60 | ||
Net cash provided by financing activities | 5,816 | 132,108 | 3,059 |
Net (decrease) increase in cash | (38,364) | 59,853 | (3,355) |
Cash at beginning of period | 63,421 | 3,568 | 6,923 |
Cash at end of period | 25,057 | 63,421 | 3,568 |
Non-cash activities | |||
Capitalized depreciation in property, plant and equipment | 688 | 668 | 674 |
Property and equipment additions incurred but not paid at period-end | 3,909 | 7,765 | 264 |
Issuance of shares in acquisition | 4,505 | ||
Insurance premium financing | 1,552 | ||
Notes payable issued for property, plant and equipment | 397 | ||
Accrued interest from notes receivable issued for membership units | 327 | ||
Cash paid for: | |||
Interest | 281 | 104 | 20 |
Income taxes | $ 314 | $ 45 | $ 35 |
Organization and Background of
Organization and Background of Business | 12 Months Ended |
Dec. 31, 2018 | |
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 at oil and natural gas well sites. 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. The systems are deployed in most of the active oil and natural gas basins in the United States, including the Permian Basin, the Eagle Ford Shale, the SCOOP/STACK formations, the Haynesville Shale, the Rockies, the Marcellus and Utica Shales and the Bakken. We also operate an independent, unit-train capable, high speed transload facility in Oklahoma (the “Kingfisher Facility”) that provides rail-to-truck transloading and high-efficiency sand silo storage and transloading services. Commercial operations commenced in January 2018 and we completed construction at the end of July 2018. We also provide software solutions to remotely monitor proppant inventory from the source mine to well site through our Railtronix® and Solaris Lens™ inventory management systems. Our customers rely on this data to manage distribution of proppant and chemicals throughout their supply chain. Initial Public Offering Solaris Oilfield Infrastructure, Inc. (“Solaris Inc.” or the “Company”) was incorporated as a Delaware corporation in February 2017 for the purpose of completing an initial public offering (“IPO” or the “Offering”) and related transactions. Our IPO was completed on May 17, 2017. In connection with the closing of the IPO, Solaris Inc. became 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 (loss) attributable to the holders of Solaris Inc.’s Class A common stock. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying consolidated financial statements of Solaris Inc. have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). These financial statements reflect all normal recurring adjustments that are necessary for fair presentation. As described in Note 1. “–Organization and Background of Business”, the Company is the sole managing member for Solaris LLC and consolidates entities in which it has a controlling financial interest. The financial statements for periods prior to the IPO have been adjusted to combine the previously separate entities for presentation purposes. Thus, for periods prior to the completion of the Offering, the accompanying consolidated financial statements include the historical financial position and results of operations of Solaris LLC and its subsidiaries. All material intercompany transactions and balances have been eliminated upon consolidation. Use of Estimates The preparation of 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 consolidated financial statements include, but are not limited to, stock-based compensation, depreciation associated with property, plant and equipment and related impairment considerations of those assets, determination of fair value of intangible assets acquired in business combinations 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. Cash For the purposes of the statements of cash flows, the Company considers all short-term, highly liquid, investments with an original maturity of three months or less to be cash equivalents. Cash is deposited in demand accounts in federally insured domestic institutions to minimize risk. Accounts of each institution are insured by Federal Deposit Insurance Corporation. Cash balances at times may exceed federally-insured limits. We have not incurred losses related to these deposits. Accounts Receivable Accounts receivable consists of trade receivables recorded at the invoice amount, plus accrued revenue that is earned but not yet billed, less an estimated allowance for doubtful accounts (if any). Accounts receivable are generally due within 60 days or less, or in accordance with terms agreed with customers. The Company considers accounts outstanding longer than the payment terms past due. The Company determines the allowance by considering a number of factors, including the length of time trade accounts receivable are past due, previous loss history, the customer’s current ability to pay its obligation, and the condition of the general economy and the industry as a whole. Accounts receivable are written off when they are deemed uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. Allowance for doubtful accounts was zero as of December 31, 2018 and 2017. 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. Detail reviews are performed related to net realizable value, giving consideration to quality, excessive levels, obsolescence and other factors. Adjustments that reduce stated amounts will be recognized as impairments in the consolidated statements of operations. There were no impairments recorded for the years ended December 31, 2018, 2017 and 2016. Business Combinations The Company accounts for business combinations using the acquisition method of accounting. Under this method, acquired assets, including separately identifiable intangible assets and any assumed liabilities, are recorded at their acquisition date estimated fair value. The excess of purchase price over the fair value amounts assigned to the assets acquired and liabilities assumed represents the goodwill amount resulting from the acquisition. Determining the fair value of assets acquired and liabilities assumed involves the use of significant estimates and assumptions. Additional information regarding the Company’s business combinations is presented in Note 3. “–Business Combinations.” Property, Plant and Equipment Property, plant and equipment are stated at cost, or fair value for assets acquired in a business combination, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful service lives of the assets as noted below: Useful Life Systems and related equipment Up to 15 years Machinery and equipment 3-10 years Furniture and fixtures 5 years Computer hardware 3 years Computer software 5-10 years Vehicles 5 years Transloading facility and equipment 15-30 years Buildings and leasehold improvements 15 years Systems that are in the process of being manufactured and the cost of construction in process at our Kingfisher Facility are considered property, plant and equipment. However, the systems and construction in process do not depreciate until they are fully completed. Systems and construction in process are a culmination of material, labor and overhead. Expenditures for maintenance and repairs are charged against income (loss) as incurred. Betterments that increase the value or materially extend the life of the related assets are capitalized. Upon sale or disposition of property and equipment, the cost and related accumulated depreciation and amortization are removed from the consolidated financial statements and any resulting gain or loss is recognized in the consolidated statements of operations. 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, LLC (“Railtronix”) as described further in Note 3, as well as patents that were filed for our systems and other intellectual property. Amortization expense of identified intangibles is expected to be approximately $770 in each of the next five years. Amortization on these assets is calculated on the straight-line method over the estimated useful lives of the assets, which is five to fifteen years based on estimates the Company believes are reasonable. The Company recorded amortization expense of $801, $46 and $1 for the years ended December 31, 2018, 2017 and 2016, respectively. Identified intangible assets by major classification consist of the following: Accumulated Net Book Gross Amortization Value As of December 31, 2018: Customer relationships $ 4,703 $ (727) $ 3,976 Software acquired in the acquisition of Railtronix 346 (54) 292 Non-competition agreement 225 (49) 176 Patents and other 114 (18) 96 Total identifiable intangibles $ 5,388 $ (848) $ 4,540 As of December 31, 2017: Customer relationships $ 4,703 $ (36) $ 4,667 Software acquired in the acquisition of Railtronix 346 (3) 343 Non-competition agreement 225 (3) 222 Patents and other 108 (5) 103 Total identifiable intangibles $ 5,382 $ (47) $ 5,335 Goodwill Goodwill represents the excess of the purchase price of a business over the estimated fair value of the identifiable assets acquired and liabilities assumed. As of December 31, 2018 and 2017, the Company reported $17,236 of goodwill related to the 2014 purchase of the silo manufacturing business from Loadcraft Industries Ltd. and the 2017 purchase of the assets of Railtronix (See Note 3. “–Business Combinations”). The Company evaluates goodwill for impairment annually, as of October 31, or more often as facts and circumstances warrant. Factors such as unexpected adverse economic conditions, competition and market changes may require more frequent assessments. There was no impairment for the years ended December 31, 2018, 2017 and 2016. Before employing detailed impairment testing methodologies, the Company may first evaluate the likelihood of impairment by considering qualitative factors relevant to the business, such as macroeconomic, industry, market or any other factors that have a significant bearing on fair value. If the Company first utilizes a qualitative approach and determines that it is more likely than not that goodwill is impaired, detailed testing methodologies are then applied. Otherwise, the Company concludes that no impairment has occurred. The Company may also choose to bypass a qualitative approach and opt instead to employ detailed testing methodologies, regardless of a possible more likely than not outcome. If the Company determines through the qualitative approach that detailed testing methodologies are required, or if the qualitative approach is bypassed, the Company compares the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Impairment of Long-Lived Assets and Definite-lived Intangible Assets Long-lived assets, such as property, plant, equipment and definite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, such as insufficient cash flows or plans to dispose of or sell long-lived assets before the end of their previously estimated useful lives. If the carrying amount is not recoverable, the Company recognizes an impairment loss equal to the amount by which the carrying amount exceeds fair value. The Company estimates fair value based on projected future discounted cash flows. Fair value calculations for long-lived assets and intangible assets contain uncertainties because it requires the Company to apply judgment and estimates concerning future cash flows, strategic plans, useful lives and market performance. The Company also applies judgment in the selection of a discount rate that reflects the risk inherent in the current business model. There was no impairment for the years ended December 31, 2018, 2017 and 2016. Revenue Recognition The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, which the Company adopted effective January 1, 2018. The Company applied ASC Topic 606 to all contracts with customers and did not elect practical expedients upon adoption of the standard. No cumulative adjustment to accumulated earnings was required as a result of this adoption, and the adoption did not have a material impact on our consolidated financial statements as no material arrangements prior to the adoption were impacted under the new pronouncement . In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under the agreement, the following steps must be performed at contract inception: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) we satisfy each performance obligation. Revenues from system rental consist primarily of fixed monthly fees charged to customers for the use of our patented mobile proppant management systems that unload, store and deliver proppant at oil and natural gas well sites as well as the use of our proprietary inventory management system, Solaris Lens, which enables our customers to track inventory levels in, and delivery rates from, each silo in a system on a remote and digital basis, both of which are considered to be separate performance obligations. Contracts with customers are typically on thirty- to sixty-day payment terms. Revenues are recognized over time as the performance obligations are satisfied under the terms of the customer contract. We determined that the performance obligation is satisfied over time as the customer simultaneously receives and consumes the benefits provided by the entity’s performance of services, typically as our systems are used by the customer. We measure progress using an input method based on resources consumed or expended relative to the total resources expected to be consumed or expended. We typically charge our customers for the rental of our systems on a monthly basis under agreements requiring the rental of a minimum number of systems for a period of twelve months. The Company is typically entitled to short fall payments if such minimum contractual obligations are not maintained by our customers. Minimum contractual obligations have been maintained and thus the Company has not recognized revenues related to shortfalls on such take or pay contractual obligations to date. Revenues from system services consist primarily of the fees charged to customers for services including mobilization and transportation of our systems, field supervision and support and services coordinating proppant delivery to systems, each of which are considered to be separate performance obligations. Contracts with customers are typically on thirty- to sixty-day payment terms. Revenues are recognized over time as the performance obligations are satisfied under the terms of the customer contract. We determined that the performance obligation for system services including field supervision and support is satisfied over time as the customer simultaneously receives and consumes the benefits provided by the entity’s performance of the services, typically based on fixed weekly or monthly contractual rates for field supervision and support and when the Company provides services coordinating proppant delivery. We measure progress using an input method based on resources consumed or expended relative to the total resources expected to be consumed or expended. When the Company provides mobilization and transportation of our systems on behalf of our customers, we determined that the performance obligation is satisfied at a point in time when the system has reached its intended destination. Revenues from transloading services consist primarily of the fees charged to customers for transloading proppant at our transloading facility, which is considered to be our performance obligation. Transloading services operations commenced in January 2018. We provide rail-to-truck transloading and high-efficiency sand silo storage and transloading services at the facility. Contracts with customers are typically on thirty- to sixty-day payment terms. Revenues are typically recognized over time as the customer simultaneously receives and consumes the benefits provided by the entity’s performance of the transloading service based on a throughput fee per ton rate for proppant delivered to and transloaded at the facility. We measure progress based on the products delivered and transloaded at the facility. Under one of our agreements at the facility, quarterly minimum throughput volumes are required and the Company is entitled to short fall payments if such minimum quarterly contractual obligations are not maintained. These shortfalls are based on fixed minimum volumes at a fixed rate and are recognized over time as throughput volumes transloaded are below minimum throughput volumes required. Revenues from inventory software services consist primarily of the fees charged to customers for the use of our Railtronix inventory management software, which is considered to be our performance obligation. The Railtronix inventory management software was acquired in December 2017. Revenues are recognized over time as the customer simultaneously receives and consumes the benefits provided by the entity’s performance based on a throughput fee to monitor proppant that is loaded into a railcar, stored at a transload facility or loaded into a truck. Deferred Revenue Deferred revenue consists of a $25,980 partial termination payment received in accordance with a contract modification which is accounted for prospectively. The partial termination payment represents the distinct unsatisfied portion of a contract to provide transloading services and are considered part of the transaction price and will be allocated to the remaining performance obligations under the contract. The Company recognized $522 of deferred revenue as Revenue from transloading services in the year ended December 31, 2018, resulting in $25,458 remaining deferred revenue as of December 31, 2018, which will be recognized over the remaining two-year term of the modified agreement. No deferred revenue was recorded or recognized as revenue during the year ended December 31, 2017. Unbilled Receivables Revenues recognized in advance of invoice issuance create assets referred to as “unbilled receivables.” These assets are presented on a combined basis with accounts receivable and are converted to accounts receivable once billed. Stock-based Compensation The Company accounts for its stock-based compensation including grants of restricted stock and options in the consolidated statements of operations based on their estimated fair values. The Company recognizes expense on a straight-line basis over the awards’ vesting period, which is generally the requisite service period. Solaris LLC previously sponsored a stock-based management compensation program called the 2015 Membership Unit Option Plan (the “Plan”). Solaris LLC accounted for the units under the Plan as compensation cost measured at the fair value of the award on the date of grant using the Black-Scholes option-pricing model. In connection with the Offering, the options granted under the Plan were modified by a conversion into options under the Solaris Long-Term Incentive Plan (the “LTIP”). Refer also to Note 9. “–Equity”. Research and Development The Company expenses research and development costs as incurred, which is included in selling, general and administrative expenses in the consolidated statements of operations. For the years ended December 31, 2018, 2017 and 2016, research and development costs were $0, $210 and $476, respectively. Financial Instruments The carrying value of the Company’s financial instruments, consisting of cash, accounts receivable, notes receivable, accounts payable, insurance premium financing and accrued expenses, approximates their fair value due to the short maturity of such instruments. Financial instruments also consist of a revolving credit facility and term loans, for which fair value approximates carrying value as the debt bears interest at a variable rate which is reflective of current rates otherwise available to the Company. As of December 31, 2018, we had $13,000 of borrowings under the 2018 Credit Agreement (as defined below) outstanding. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. Fair Value Measurements The Company’s financial assets and liabilities are to be measured using inputs from the three levels of the fair value hierarchy, of which the first two are considered observable and the last unobservable, which are as follows: · Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date; · Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or other inputs corroborated by observable market data for substantially the full term of the assets or liabilities; and · Level 3—Unobservable inputs that reflect the Company’s assumptions that market participants would use in pricing assets or liabilities based on the best information available. Income Taxes Solaris Inc. is a corporation and, as a result, is subject to United States federal, state and local income taxes. For the years ended December 31, 2018 and 2017, we recognized a combined United States federal and state provision for income taxes of $12,961 and $25,899, respectively. On December 22, 2017, Public Law No. 115-97, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law. The provisions of the Tax Act that impact us include, but are not limited to, (1) reducing the United States federal corporate income tax rate from 35% to 21%, (2) eliminating the corporate alternative minimum tax (AMT); (3) allowing business to immediately expense the cost of new investments in certain qualified depreciable assets acquired after September 27, 2017 (with a phase-down of such expensing starting in 2023); and (4) reducing the maximum deduction for net operating loss (NOL) carryforwards generated in tax years beginning after December 31, 2017 to 80% of a taxpayer’s taxable income. In conjunction with the Tax Act, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. We previously reported provisional amounts of the income tax effects of the Tax Act for which the accounting was incomplete, but a reasonable estimate could be determined. During the year ended December 31, 2018, our accounting for the income tax effects of the Tax Act was completed without material changes to the previously provided estimates. Solaris LLC is treated as a partnership for United States federal income tax purposes and therefore does not pay federal income tax on its taxable income. Instead, the Solaris LLC members are liable for federal income tax on their respective shares of the Company’s taxable income reported on the members’ federal income tax returns. Our revenues are derived through transactions in several states, which may be subject to state and local taxes. Accordingly, we have recorded a liability for state and local taxes that management believes is adequate for activities as of December 31, 2018 and 2017. We are subject to a franchise tax imposed by the State of Texas. The franchise tax rate is 1%, calculated on taxable margin. Taxable margin is defined as total revenue less deductions for cost of goods sold or compensation and benefits in which the total calculated taxable margin cannot exceed 70% of total revenue. Current expenses related to Texas franchise tax were approximately $684,000, $247,000 and $43,000 for the years ended December 31, 2018, 2017 and 2016. We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events included in the consolidated financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the book value and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period in which the enactment date occurs. We recognize deferred tax assets to the extent we believe these assets are more-likely-than-not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent results of operations. We record uncertain tax positions on the basis of a two-step process in which (1) we determine whether it is more-likely-than-not the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions meeting the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. Interest and penalties related to income taxes are included in the benefit (provision) for income taxes in our consolidated statement of operations. We have not incurred any significant interest or penalties related to income taxes in any of the periods presented. See Note 10. “–Income Taxes” for additional information regarding income taxes. Payable Related to the Tax Receivable Agreement In connection with the IPO, Solaris Inc. entered into a Tax Receivable Agreement (the “Tax Receivable Agreement”) with the members of Solaris LLC immediately prior to the IPO (each such person and any permitted transferee, a “TRA Holder,” and together, the “TRA Holders”) on May 17, 2017. This agreement generally provides for the payment by Solaris Inc. to each TRA Holder of 85% of the net cash savings, if any, in United States federal, state and local income tax or franchise tax that Solaris Inc. actually realizes (computed using simplifying assumptions to address the impact of state and local taxes) or is deemed to realize in certain circumstances in periods after the IPO as a result of (i) certain increases in tax basis that occur as a result of Solaris Inc.’s acquisition (or deemed acquisition for United States federal income tax purposes) of all or a portion of such TRA Holder's Solaris LLC Units in connection with the Reorganization Transactions or pursuant to the exercise of the Redemption Right or the Call Right (each as defined in the Solaris LLC Agreement) and (ii) imputed interest deemed to be paid by Solaris Inc. as a result of, and additional tax basis arising from, any payments Solaris makes under the Tax Receivable Agreement. Solaris Inc. will retain the benefit of the remaining 15% of these cash savings. As of December 31, 2018 and 2017, Solaris Inc. recorded a payable related to the Tax Receivable Agreement of $56,149 and $24,675, 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. Environmental Matters The Company is subject to various federal, state and local laws and regulations relating to the protection of the environment. Management has established procedures for the ongoing evaluation of the Company’s operations, to identify potential environmental exposures and to comply with regulatory policies and procedures. Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations and do not contribute to current or future revenue generation are expensed as incurred. Liabilities are recorded when environmental costs are probable, and the costs can be reasonably estimated. The Company maintains insurance which may cover in whole or in part certain environmental expenditures. As of December 31, 2018 and 2017, there were no environmental matters deemed probable. Segment Information Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker is the Chief Executive Officer. The Company and the Chief Executive Officer view the Company’s operations and manage its business as one operating segment. All long-lived assets of the Company reside in the United States. Accounting Standards Recently Adopted In February 2017, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2017‑05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610‑20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets ("ASU 2017‑05"). ASU 2017‑05 clarifies the scope of Subtopic 610‑20 and adds guidance for partial sales of nonfinancial assets. Subtopic 610‑20 was issued in May 2014 as part of ASU No. 2014‑09, Revenue from Contracts with Customers (Topic 606) and provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. The amendments in ASU 2017‑05 clarify that a financial asset is within the scope of Subtopic 610‑20 if it meets the definition of an in substance nonfinancial asset. The amendments also clarify that nonfinancial assets within the scope of Subtopic 610‑20 may include nonfinancial assets transferred within a legal entity to a counterparty. The amendments in ASU 2017‑05 are effective at the same time as the amendments in ASU 2014‑09, which are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted for interim or annual reporting periods beginning after December 15, 2016. An entity may elect to apply the amendments in ASU 2017‑05 either retrospectively to each period presented in the financial statements in accordance with the guidance on accounting changes (retrospective approach) or retrospectively with a cumulative effect adjustment to retained earnings as of the beginning of the fiscal year of adoption (modified retrospective approach). The Company adopted ASU 2017-05 during the quarter ended March 31, 2018 using the modified retrospective approach. Adoption of this ASU did not impact the Company’s opening balance of retained earnings as of January 1, 2018 as our reported results did not differ under the new revenue standard and the previous guidance. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash ("ASU 2016-18"). ASU 2016-18 is intended to add and clarify guidance on the classification and presentation of restricted cash on the statement of cash flows. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted ASU 2016-18 during the quarter ended March 31, 2018, which did not have an impact on the consolidated financial statements. In August 2016, the FASB issued ASU 2016‑15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"), seeking to eliminate diversity in practice related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in ASU 2016‑15 address eight specific cash flow issues and apply to all entities, including both business entities and not-for-profit entities that are required to present a statement of cash flows under FASB ASC 230, Statement of Cash Flows. The amendments in ASU 2016‑15 are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted ASU 2016-15 during the quarter ended March 31, 2018, which did not have an impact on the consolidated financial statements. Accounting Standards Recently Issued But Not Yet Adopted In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), modifies the disclosure requirements in Topic 820, Fair Value Measurement, by removing certain disclo |
Business Combinations
Business Combinations | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations | |
Business Combinations | 3. Business Combinations On December 6, 2017 the Company completed its acquisition of substantially all of the assets of Railtronix, a leading provider of real-time inventory management solutions for proppant mining, rail shipping and transloading operations, for $9,505 including $5,000 cash consideration, and $4,505 equity consideration of 279,655 Solaris LLC Units and 279,655 shares of Class B common stock. The equity consideration was based on the closing price of our Class A common stock on December 6, 2017 of $16.11. The purchase price was allocated based on the fair value of $4,697, $225, and $346 for identifiable intangible assets including customer relationships, a non-competition agreement and software, respectively. The amount of consideration in excess of the fair value of identifiable intangible assets of $4,237 was recognized as goodwill. The valuations to derive the allocation of purchase price included a multi period excess earnings valuation method, with or without valuation method, and relief from royalty valuation method estimates using estimates for future cash flows from customer relationships, return on workforce, customer attrition, working capital assumptions, income taxes, competition, costs saved through owning the asset and risk adjusted discount rates. The goodwill recognized is attributable to expected customer growth as well as expected synergies of integrating Railtronix with the Company’s Solaris Lens inventory management system, which we believe will uniquely position the Company to provide critical supply chain data to help our customers improve the reliability of proppant supply, save time and reduce the delivered cost of proppant by monitoring key data points and performance indicators. A portion of goodwill is expected to be deductible for corporate income tax purposes. The actual impact of this acquisition was an increase to “Total revenues” of $205 and an increase to “Net income” of $87 in the consolidated statement of operations for the year ended December 31, 2017. The unaudited pro forma results presented below have been prepared to give the effect of the acquisition discussed above on our results of operations for the years ended December 31, 2017 and 2016 as if it had been consummated on January 1, 2016. The unaudited pro forma results do not purport to represent what our actual results of operations would have been if the acquisition had been completed on such date or to project our results of operation for any future date or period. For the Year Ended For the Year Ended December 31, 2017 December 31, 2016 Actual Pro Forma Actual Pro Forma Pro forma (unaudited) Total revenues $ 67,395 $ 69,252 $ 18,157 $ 19,192 Net income 22,487 23,017 2,803 2,496 Certain contingent performance-based cash awards totaling $2,500 are also payable to the seller upon the achievement of generating certain financial milestones. One milestone was completed and $1,625 was recognized and paid in the quarter ending March 31, 2018 and is recorded in other operating expense. The Company has not yet concluded that it is probable that the remaining milestones will be achieved and thus has not recognized the additional $875 obligation in the consolidated financial statements. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 12 Months Ended |
Dec. 31, 2018 | |
Prepaid Expenses and Other Current Assets. | |
Prepaid Expenses and Other Current Assets | 4. Prepaid Expenses and Other Current Assets Prepaid expenses and other currents assets were comprised of the following at December 31: 2018 2017 Prepaid purchase orders $ 2,802 $ 2,731 Prepaid insurance 576 389 Deposits 882 261 Other assets 1,232 241 Prepaid expenses and other current assets $ 5,492 $ 3,622 |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment. | |
Property, Plant and Equipment | 5. Property, Plant and Equipment Property, plant and equipment was comprised of the following at December 31: 2018 2017 Systems and related equipment $ 254,795 $ 116,307 Systems in process 11,245 6,043 Transloading facility and equipment 40,218 — Transloading facility construction in process — 28,729 Computer and related equipment 4,990 2,455 Machinery and equipment 5,126 4,396 Vehicles 8,334 4,577 Buildings 4,280 3,251 Land 612 578 Furniture and fixtures 282 91 Property, plant and equipment, gross 329,882 166,427 Less: accumulated depreciation (33,344) (15,264) Property, plant and equipment, net $ 296,538 $ 151,163 Depreciation expense for the years ended December 31, 2018, 2017 and 2016 was $17,621, $6,589 and $3,791, respectively, of which $14,920, $5,792 and $3,352 is attributable to cost of proppant system rental, $1,274, $461 and $160 is attributable to cost of proppant system services, $954, $0, and $0 is attributable to cost of transloading services, and $473, $336 and $279 is attributable to selling, general and administrative expenses, respectively. The Company capitalized $688, $668 and $674 of depreciation expense associated with machinery and equipment used in the manufacturing of its systems for the years ended December 31, 2018, 2017 and 2016, respectively. In July 2017, the Company acquired a lease for $250 in connection with the Kingfisher Facility described in Note 12. “–Commitments and Contingencies”. The Kingfisher Facility is recognized in property, plant and equipment as Transloading facility and equipment. |
Accrued Liabilities
Accrued Liabilities | 12 Months Ended |
Dec. 31, 2018 | |
Accrued Liabilities | |
Accrued Liabilities | 6. Accrued Liabilities Accrued liabilities were comprised of the following at December 31: 2018 2017 Property, plant and equipment $ 2,153 $ 7,612 Employee related expenses 4,500 4,829 Selling, general and administrative 944 1,507 Cost of revenue 2,702 825 Excise, franchise and sales taxes 1,461 608 Ad valorem taxes 774 15 Other 124 72 Accrued liabilities $ 12,658 $ 15,468 |
Capital Leases
Capital Leases | 12 Months Ended |
Dec. 31, 2018 | |
Capital Leases | |
Capital Leases | 7. Capital Leases Solaris LLC leases property from the City of Early, Texas under an agreement classified as a capital lease. The lease expires on February 25, 2025. The capital lease obligation is payable in monthly installments of $3 including imputed interest at a rate of 3.25%. The Company also leases certain office equipment with purchase options upon the end of lease terms which are accounted for as capital leases with various expiration dates. As of December 31, 2018 and 2017, the Company had property, plant and equipment under capital leases with a cost of $299 and $294, respectively, and accumulated depreciation of $85 and $64, respectively. Future principal minimum payments under capital lease agreements are as follows as of December 31, 2018: Amount 2019 $ 35 2020 35 2021 33 2022 33 2023 33 Thereafter 40 Total payments 209 Less: amount representing imputed interest at 3.25% (20) Present value of payments 189 Less: current portion (35) Capital lease obligation, net of current portion $ 154 |
Senior Secured Credit Facility
Senior Secured Credit Facility | 12 Months Ended |
Dec. 31, 2018 | |
Senior Secured Credit Facility | |
Senior Secured Credit Facility | 8. Senior Secured Credit Facility On January 19, 2018, we entered into a new credit agreement (the “2018 Credit Agreement”) by and among the Company, as borrower, each of the lenders party thereto and Woodforest National Bank, as administrative agent (the “Administrative Agent”). The 2018 Credit Agreement replaced, in its entirety, the Company’s prior credit facility, as amended on May 17, 2017, by and among the Company, as borrower, each of the lenders party thereto and the Administrative Agent. The 2018 Credit Agreement consists of a $50,000 advancing term loan (the “Advance Loan”) and a $20,000 revolving loan, with a $10,000 uncommitted accordion option to increase the total revolving loans (the “Revolving Loan”, and together with the Advance Loan, the “Loans”). No lender has any obligation to increase its own revolving credit commitment. The Advance Loan amortizes beginning in April 2019 and each of the Loans matures on January 19, 2022. Our obligations under the Loans are generally secured by a pledge of substantially all of the assets of the Company and its subsidiaries, and such obligations are guaranteed by our domestic subsidiaries other than Immaterial Subsidiaries (as defined in the 2018 Credit Agreement). We have the option to prepay the loans at any time without penalty. The 2018 Credit Agreement permits extensions of credit under the Advance Loan through the end of April 2019 and under the Revolving Loan until January 19, 2022. Borrowings under the Revolving Loan are limited by both commitments and a borrowing base determined monthly by calculating percentages of the eligible accounts and the eligible inventory, provided that the portion of the borrowing base attributable to eligible inventory cannot exceed 35% of the entire borrowing base. Borrowings under the Advance Loan are not to exceed 80% of the then current net orderly liquidation value of the applicable equipment or facility build out or the applicable equipment constructed or acquired which is then subject to the liens securing the Loans. As of December 31, 2018, we had $13,000 of outstanding borrowings under the 2018 Credit Agreement. We have subsequently repaid the $13,000 and have availability to borrow approximately $20,000 under the Revolving Loan and $50,000 under the Advance Loan. Borrowings under the 2018 Credit Agreement bear interest at one-month LIBOR plus an applicable margin and interest is payable monthly. The applicable margin ranges from 3.00% to 3.50% depending on our senior leverage ratio. Borrowings under the Revolving Loan had a weighted average interest rate of 5.27% for the year ended December 31, 2018. The Credit Agreement requires that we pay a monthly commitment fee on undrawn amounts of the Revolving Loan, ranging from 0.25% to 0.50% depending upon the average outstanding balance of the obligations relative to the Revolving Loan commitments. The 2018 Credit Agreement requires that we maintain ratios of (a) indebtedness to consolidated EBITDA of not more than 3.50 to 1.00, which stepped down to 3.25 to 1.00 beginning April 1, 2018 and 3.00 to 1.00 beginning October 1, 2018, and (b) senior indebtedness to consolidated EBITDA of not more than 2.50 to 1.00, which stepped down to 2.25 to 1.00 beginning April 1, 2018 and 2.00 to 1.00 beginning October 1, 2018. For the purpose of these tests, there is subtracted from indebtedness and senior indebtedness, respectively, an amount equal to the lesser of $10.0 million or 50% of unrestricted cash and cash equivalents of the Company and its subsidiaries. EBITDA, as defined in the 2018 Credit Agreement, excludes certain noncash items and any extraordinary, unusual or non-recurring gains, losses or expenses. The 2018 Credit Agreement also requires that we maintain a ratio of consolidated EBITDA to fixed charges of not less than 1.25 to 1.00. Capital Expenditures are permitted up to $225.0 million for the fiscal year ending December 31, 2018, and $75.0 million for fiscal year ending December 31, 2019 and each fiscal year thereafter. In addition, for fiscal years beginning on January 1, 2020, any unused availability for capital expenditures from the immediately preceding fiscal year may be carried forward to the subsequent year; provided, however that we are permitted to make any capital expenditures in an amount equal to the proceeds of equity contributions made to the Company used to fund such capital expenditures. As of December 31, 2018, we were in compliance with all covenants in accordance with our 2018 Credit Agreement. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity | |
Equity | 9. Equity Dividends On December 27, 2018, the Company paid its first quarterly cash dividend of $0.10 per share of Class A common stock. Solaris LLC paid a distribution of $4,713, or $0.10 per Solaris LLC Unit, to all Solaris LLC unitholders as of December 17, 2018, $2,750 of which was paid to the Company. The Company used the proceeds from the distribution to pay the dividend to all holders of shares of Class A common stock as of December 17, 2018, which totaled $2,750, including $41 related to shares of restricted stock. Stock-based compensation Effective May 17, 2017, both the Board of Directors of Solaris Inc. (the "Board") and the holder of all Solaris Inc.'s then-outstanding equity interests adopted the LTIP for the benefit of employees, directors and consultants of the Company and its affiliates. 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. Class A common stock withheld to satisfy exercise prices or tax withholding obligations will be available for delivery pursuant to other awards. The LTIP will be administered by the Board, the Compensation Committee of the Board or an alternative committee appointed by the Board. In connection with the IPO, the options granted under the Plan were converted into options under the LTIP. A total of 591,261 options to purchase Class A common stock of the Company were issued to employees, directors and consultants at an exercise price of $2.87 per option, had a weighted average grant date fair value of $12.04 per option and had the same fair value as immediately prior to the conversion. The vesting terms from the options under the LTIP were accelerated from the previous vesting terms under the Plan such that, twenty-five percent (25%) of the options were considered vested upon the conversion, an additional 25% of the options vested on July 24, 2017 and the remaining options vested on November 13, 2017. During the year ended December 31, 2018, 327,594 options were exercised in exchange for an equal number of shares of Class A common stock and a total of 539 shares were surrendered and recorded as treasury stock on the consolidated balance sheets. Cash received from option exercises for the year ended December 31, 2018 was $936. The actual tax expense realized for the tax deductions from option exercises totaled $128 for the year ended December 31, 2018. During the year ended December 31, 2017, 75,130 options were exercised in exchange for an equal number of shares of Class A common stock and a total of 16,354 shares were surrendered and recorded as treasury stock on the consolidated balance sheets. Cash received from option exercises for the year ended December 31, 2017 was $263. The actual tax expense realized for the tax deduction from option exercise totaled $20 for the year ended December 31, 2017. As of December 31, 2018, 419,078 options have been exercised, 33,346 forfeited and 138,837 remain outstanding. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatility is based on implied volatilities from historical trading of publicly traded companies which are in the same industry sector. The simplified method is used to derive an expected term. The expected term represents an estimate of the time options are expected to remain outstanding. The risk-free rate for periods within the contractual life of the option is based on the United States treasury yield curve in effect at the time of grant. In connection with the 2017 grants, the Company used the following assumptions to determine compensation costs for options granted: 2017: Expected volatility 37.84 % Expected term (years) 4.97 Expected annual dividend yield — % Expected risk-free rate of return 1.42 % Compensation cost, as measured at the grant date fair value of the award, is recognized as an expense over the employee's requisite service period for service based awards (generally the vesting period of the award of four years). For the year ended December 31, 2018, the Company did not recognize stock-based compensation expense on options. For the years ended December 31, 2017 and 2016, the Company recognized $295 and $127 of stock-based compensation expense on options, respectively, in salaries, benefits and payroll taxes in the consolidated statements of operations. The following is a summary of the option activity under the Plan for the year ended December 31, 2016 and under the LTIP for the years ended December 31, 2018 and 2017: Options Outstanding Weighted Average Weighted Remaining Aggregate Average Exercise Contractual Intrinsic Value Options Price Term (years) (in thousands) Balance, January 1, 2016 14,596 $ 135.00 9.66 $ — Granted — — — Exercised — — — Forfeited (1,658) 135.00 — Balance, December 31, 2016 12,938 $ 135.00 8.67 $ — Exercisable, December 31, 2016 3,235 $ 135.00 8.67 $ — Canceled (12,938) 135.00 — Granted 591,261 2.87 — Exercised (91,484) 2.87 — Forfeited (33,346) 2.87 — Balance, December 31, 2017 466,431 $ 2.87 6.79 $ — Exercisable, December 31, 2017 466,431 $ 2.87 6.79 $ — Canceled — — — Granted — — — Exercised (327,594) 2.87 — Forfeited — — — Balance, December 31, 2018 138,837 $ 2.87 7.92 $ — Exercisable, December 31, 2018 138,837 $ 2.87 7.92 $ — As of December 31, 2018, the Company had no unvested options outstanding. The Company accounts for its stock-based compensation including grants of restricted stock in the consolidated statements of operations based on their estimated fair values on the date of grant. The following table further summarizes activity related to restricted stock for the years ended December 31, 2018 and 2017: Restricted Stock Awards Weighted Average Grant Date Fair Number of Shares Value ($) Issued on May 17, 2017 648,676 $ 12.04 Awarded 584,477 13.25 Vested — — Forfeited (14,888) 12.87 Unvested at December 31, 2017 1,218,265 $ 12.61 Awarded 88,664 16.92 Vested (644,387) 12.58 Forfeited (251,045) 12.49 Unvested at December 31, 2018 411,497 $ 13.67 For the year ended December 31, 2018, the Company recognized $6, $191, $3 and $3,661 of stock-based compensation expense on restricted stock in cost of system rental, cost of system services, cost of transloading services and salaries, benefits and payroll taxes in the consolidated statements of operations and $1,040 within property, plant and equipment, net in the consolidated balance sheets. For the year ended December 31, 2017, the Company recognized $3,406 of stock-based compensation expense on restricted stock in salaries, benefits and payroll taxes in the consolidated statements of operations and $1,080 within property, plant and equipment, net in the consolidated balance sheets. As of December 31, 2018, total unrecognized compensation cost related to nonvested restricted stock was $4,361, which is expected to be recognized over a weighted-average period of 1.87 years. 213,636 shares, 179,790 shares, and 18,071 shares of restricted stock vest in 2019, 2020 and 2021, respectively. The number of shares remaining available for future issuance under LTIP is 3,595,738. Notes receivable from unit-holders Solaris LLC's Limited Liability Company Agreement authorized Solaris LLC to issue Solaris LLC Units at a value of $100 per unit to Solaris LLC's employees in exchange for a promissory note. As of December 31, 2018 and 2017, there were no outstanding borrowings related to Solaris LLC Units issued to non-executive officer employees and consultants under promissory notes. In 2017, there were no additional Solaris LLC Units issued in exchange for promissory notes. During 2017, employees paid off their applicable promissory notes of $4.7 million principal and $575 of accrued interest in cash for previously assigned 46,875 Solaris LLC Units. As of December 31, 2017, there were no outstanding borrowings related to Solaris LLC Units issued to non-executive officer employees and consultants under promissory notes. Earnings Per Share Basic earnings per share of Class A common stock is computed by dividing net income attributable to Solaris for periods following the IPO and Reorganization Transactions, 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. There were no shares of Class A or Class B common stock outstanding prior to the IPO, therefore, no earnings per share information has been presented for any period prior to that date. The following table sets forth the calculation of earnings per share, or EPS, for the years ended December 31, 2018 and 2017: Year Ended December, Basic net income per share: 2018 2017 Numerator Net income attributable to Solaris $ 42,431 $ 3,636 Less income attributable to participating securities (1) (1,230) (248) Net income attributable to common stockholders $ 41,201 $ 3,388 Denominator Weighted average number of unrestricted outstanding common shares used to calculate basic net income per share 25,678 12,117 Effect of dilutive securities: Stock options (2) 151 365 Diluted weighted-average shares of Class A common stock outstanding used to calculate diluted net income per share 25,829 12,482 Earnings per share of Class A common stock - basic $ 1.60 $ 0.28 Earnings per share of Class A common stock - diluted $ 1.59 $ 0.27 (1) The Company's restricted shares of common stock are participating securities. (2) The years ended December 31, 2018 and 2017 include 151 shares and 365 shares, respectively, of Class A common stock resulting from an assumed exercise of the stock options in the calculation of the denominator for diluted earnings per common share as these shares were dilutive. 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: Year Ended December, 2018 2017 Class B common stock 20,727 31,100 Restricted stock awards 412 225 Total 21,139 31,325 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Income Taxes | 10. Income Taxes Income Taxes The Company is a corporation and, as a result is subject to United States federal, state and local income taxes. Solaris LLC is treated as a pass-through entity for United States federal tax purposes and in most state and local jurisdictions. As such, Solaris LLC's members, including the Company, are liable for federal and state income taxes on their respective shares of Solaris LLC's taxable income. Solaris LLC is liable for income taxes in those states not recognizing its pass-through status. On December 22, 2017, Public Law No. 115-97, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law. The provisions of the Tax Act that impact us include, but are not limited to, (1) reducing the United States federal corporate income tax rate from 35% to 21%, (2) eliminating the corporate alternative minimum tax (AMT); (3) allowing business to immediately expense the cost of new investments in certain qualified depreciable assets acquired after September 27, 2017 (with a phase-down of such expensing starting in 2023); and (4) reducing the maximum deduction for net operating loss (NOL) carryforwards generated in tax years beginning after December 31, 2017 to 80% of a taxpayer’s taxable income. In conjunction with the Tax Act, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. We previously reported provisional amounts of the income tax effects of the Tax Act for which the accounting was incomplete, but a reasonable estimate could be determined. During the year ended December 31, 2018, our accounting for the income tax effects of the Tax Act was completed without material changes to the previously provided estimates. Income Tax Expense The components of the income tax expense are: Year Ended December 31, 2018 2017 2016 Current: Federal $ — $ — $ — State 684 247 43 684 247 43 Deferred: Federal 11,410 24,385 — State 867 1,267 — 12,277 25,652 — Income tax expense $ 12,961 $ 25,899 $ 43 Income tax expense differs from the amount computed by applying the 2018 statutory federal income tax rate of 21% and the 2017 and 2016 statutory federal income tax rate of 35% to income before taxes as follows: Year Ended December 31, 2018 2017 2016 Income before income taxes $ 98,913 $ 48,386 $ 2,846 Less: net income prior to corporate reorganization — 3,665 2,846 Less: net income before income taxes attributable to noncontrolling interest 43,521 15,439 — Income attributable to Solaris Oilfield Infrastructure, Inc. stockholders before income taxes 55,392 29,282 — Income tax expense (benefit) at the federal statutory rate 11,632 10,249 — State income taxes, net of federal benefit 1,373 1,071 43 Remeasurement of federal deferred tax assets due to rate change — 22,637 — Tax Receivable Agreement adjustments — (8,058) — Other (44) — — Income tax (benefit) expense $ 12,961 $ 25,899 $ 43 The effective combined United States federal and state income tax rates were 13.1%, 53.5% and 1.5% for the years ended December 31, 2018, 2017 and 2016, respectively. For the year ended December 31, 2018, our effective tax rate differed from the statutory rate primarily due to Solaris LLC’s pass-through treatment for United States federal income tax purposes. The year-over-year decrease in the effective tax rate from the year ended December 31, 2017 to the year ended December 31, 2018 was primarily attributable to the remeasuring of our existing net deferred tax assets to a new federal corporate income tax rate in the year ending December 31, 2017. The year-over-year increase in the effective tax rate from the year ended December 31, 2016 to the year ended December 31, 2017 was primarily attributable to the Reorganization Transactions in 2017, an increase in net income during the period, and the remeasuring of deferred tax assets for the tax rate change enacted under the Tax Act. Deferred Tax Assets and Liabilities The Company’s deferred tax position reflects the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting. Significant components of the deferred tax assets and liabilities are as follows: December 31, 2018 2017 Assets: Investments in subsidiaries $ — $ 20,219 Imputed interest 1,366 612 Net operating loss carryforward 41,648 5,493 Total deferred tax assets 43,014 26,324 Liabilities: Investments in subsidiaries 17,575 — Total deferred tax liabilities 17,575 — Net deferred tax asset $ 25,439 $ 26,324 As of December 31, 2018, the Company had approximately $185.8 million of federal net operating loss carryovers and $49.2 million of state net operating loss carryovers. $119.9 million of such federal net operating loss carryovers have no expiration date and the remaining federal net operating loss carryovers expire in 2037. State net operating loss carryovers will expire in varying amounts beginning in 2037. The Company regularly reviews its deferred tax assets, including net operating loss carryovers, for recoverability and a valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset may not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences are deductible. In assessing the need for a valuation allowance, the Company makes estimates and assumptions regarding projected future taxable income, its ability to carry back operating losses to prior periods, the reversal of deferred tax liabilities and the implementation of tax planning strategies. 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 these assumptions in the future, changes in forecasted taxable income may alter this expectation and may result in an increase to the valuation allowance and an increase in the effective tax rate. Uncertain Tax Benefits The Company evaluates its tax positions and recognizes only tax benefits that, more likely than not, will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax position is measured at the largest amount of benefit that has a greater than 50.0% likelihood of being realized upon settlement. As of December 31, 2018 and 2017, the Company’s uncertain tax benefits totaling $816 and $812, respectively, are reported as a component of the net deferred tax asset in the consolidated balance sheets. The full balance of unrecognized tax benefits as of December 31, 2018, if recognized, would affect the effective tax rate. However, we do not believe that any of the unrecognized tax benefits will be realized within the coming year. The Company has elected to recognize interest and penalties related to unrecognized tax benefits in income tax expense notwithstanding the fact that, as of December 31, 2018, the Company has not accrued any penalties or interest. The addition to uncertain tax benefits during the year ended December 31, 2017 related to the treatment of certain costs incurred in connection with the IPO and November Offering. Changes in the Company’s gross unrecognized tax benefits are as follows: Year Ended December 31, 2018 2017 2016 Balance, January 1, $ 812 $ — $ — Additions for the current year tax — 812 — Additions related to prior years 4 — — Reductions related to settlements with taxing authorities — — — Reductions related to lapses in statute of limitations — — — Reductions related to prior years — — — Balance, December 31, $ 816 $ 812 $ — Payables Related to the Tax Receivable Agreement As of December 31, 2018, our liability under the Tax Receivable Agreement was $56,149, representing 85% of the calculated net cash savings in United States federal, state and local income tax or franchise tax that Solaris Inc. anticipates realizing in future years from certain increases in tax basis and certain tax benefits attributable to imputed interest as a result of Solaris Inc.’s acquisition (or deemed acquisition for United States federal income tax purposes) of Solaris LLC Units in connection with the Reorganization Transactions or pursuant to an exercise of the Redemption Right or the Call Right (each as defined in the Solaris LLC Agreement). The projection of future taxable income involves significant judgment. Actual taxable income may differ from our estimates, which could significantly impact our liability under the Tax Receivable Agreement. We have determined it is more-likely-than-not that we will be able to utilize all of our deferred tax assets subject to the Tax Receivable Agreement; therefore, we have recorded a liability under the Tax Receivable Agreement related to the tax savings we may realize from certain increases in tax basis and certain tax benefits attributable to imputed interest as a result of Solaris Inc.’s acquisition (or deemed acquisition for United States federal income tax purposes) of Solaris LLC Units in connection with the Reorganization Transactions or pursuant to an exercise of the Redemption Right or the Call Right (each as defined in the Solaris LLC Agreement). If we determine the utilization of these deferred tax assets is not more-likely-than-not in the future, our estimate of amounts to be paid under the Tax Receivable Agreement would be reduced. In this scenario, the reduction of the liability under the Tax Receivable Agreement would result in a benefit to our consolidated statement of operations. |
Concentrations
Concentrations | 12 Months Ended |
Dec. 31, 2018 | |
Concentrations | |
Concentrations | 11. Concentrations For the year ended December 31, 2018, three customers accounted for 15%, 10% and 10% of the Company’s revenue. For the year ended December 31, 2017, four customers accounted for 23%, 15%, 13%, and 11% of the Company’s revenue. For the year ended December 31, 2016, one customer accounted for 40% of the Company’s revenue. As of December 31, 2018, three customers accounted for 20%, 10% and 10% of the Company’s accounts receivable. As of December 31, 2017, four customers accounted for 23%, 20%, 10% and 10% of the Company’s accounts receivable. For the year ended December 31, 2018, two suppliers accounted for 13% and 11% of the Company’s total purchases. For the year ended December 31, 2017, no supplier accounted for 10% or more of the Company’s total purchases. For the year ended December 31, 2016, one supplier accounted for 17% of the Company’s total purchases. As of December 31, 2018, one supplier accounted for 13% of the Company’s accounts payable. As of December 31, 2017, three suppliers accounted for 17%, 11% and 10% of the Company’s accounts payable. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
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 consolidated financial statements. Operating Leases The Company leases land and equipment under operating leases which expire at various dates through February 2047. The Company’s future minimum payments under non-cancelable operating leases are as follows: Year Ending December 31, Amount 2019 $ 1,432 2020 1,375 2021 1,299 2022 1,093 2023 1,092 Thereafter 9,725 Total minimum lease payments $ 16,016 The above amounts include $6,265 of commitments related to a 30-year land lease with the State of Oklahoma related to the Company's Kingfisher Facility further described below. Additionally, the above amounts include $7,662 of commitments related to 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 $10,216 as of December 31, 2018. Refer to Note 13. “–Related Party Transactions” for additional information regarding related party transactions recognized. Other Commitments In the normal course of business, the Company has certain short-term purchase obligations and commitments for products and services, primarily related to purchases of materials used in the manufacturing of its systems. As of December 31, 2018 and 2017, the Company had commitments of approximately $18,998 and $33,600, respectively, related to these commitments. In connection with the acquisition of Railtronix, the seller is entitled to certain performance-based cash awards totaling $2,500 upon the achievement of certain financial milestones. As of December 31, 2018, one milestone had been achieved and the Company paid and recognized $1,625 in March 2018 in other operating expense in the consolidated statements of operations. However, as of December 31, 2018, the Company had not concluded that the remaining milestone will be achieved and thus has not recognized additional obligations in the consolidated financial statements. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions | |
Related Party Transactions | 13. Related Party Transactions The Company recognizes certain costs incurred in relation to transactions with entities owned or partially owned by William A. Zartler, the Chief Executive Officer and Chairman of the Board. These costs include rent paid for office space, travel services, personnel, consulting and administrative costs. For the years ended December 31, 2018, 2017 and 2016, Solaris LLC paid $1,022, $910 and $325, respectively, for these services. As of December 31, 2018 and 2017, the Company included $232 and $58, respectively, in prepaid expenses and other current assets on the consolidated balance sheets. Additionally, as of December 31, 2018 and 2017, the Company included $103 and $6, respectively, of accruals to related parties in accrued liabilities on the consolidated balance sheet. These costs are primarily incurred in connection with the administrative services agreement, dated November 22, 2016, between Solaris LLC and Solaris Energy Management, LLC (“SEM”), a company partially owned by William A. Zartler (as amended, the “Amended Services Agreement”). Payables Related to the Tax Receivable Agreement In connection with the IPO, Solaris Inc. entered into the Tax Receivable Agreement with the TRA Holders on May 17, 2017. See Note 10. “–Income Taxes” for further discussion of the impact of the Tax Receivable Agreement on Solaris Inc. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events | |
Subsequent Events | 14. Subsequent Events The Company has evaluated events and transactions subsequent to the balance sheet date and through February 27, 2019, the date the financial statements were available to be issued. 2018 Credit Agreement In January 2019, the Company repaid the $13,000 outstanding under the Revolving Loan. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Selected Quarterly Financial Data (Unaudited) | |
Selected Quarterly Financial Data (Unaudited) | 15. Selected Quarterly Financial Data (Unaudited) Three Months Ended March 31, June 30, September 30, December 31, (in thousands, except per share amounts) 2018 Total revenue $ 36,018 $ 47,155 $ 56,686 $ 57,337 Operating income 15,526 24,796 30,790 28,175 Net income 13,415 21,448 26,437 24,652 Net income attributable to Solaris 5,930 10,597 13,019 12,885 Earnings per share of Class A common stock - basic $ 0.24 $ 0.40 $ 0.49 $ 0.47 Earnings per share of Class A common stock - diluted $ 0.23 $ 0.40 $ 0.49 $ 0.47 2017 Total revenue $ 10,324 $ 13,389 $ 18,478 $ 25,204 Operating income 4,825 1,670 8,082 10,884 Net income 4,782 1,062 7,406 9,237 Net income attributable to Solaris — 157 1,379 2,100 Earnings per share of Class A common stock - basic (1) $ — $ 0.01 $ 0.13 $ 0.13 Earnings per share of Class A common stock - diluted (1) $ — $ 0.01 $ 0.12 $ 0.13 (1) Represents earnings per share of Class A common stock and weighted-average shares of Class A common stock outstanding for the period from May 17, 2017 through December 31, 2017, the period following the Reorganization Transactions and IPO. See Note 9. “–Equity.” |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The accompanying consolidated financial statements of Solaris Inc. have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). These financial statements reflect all normal recurring adjustments that are necessary for fair presentation. As described in Note 1. “–Organization and Background of Business”, the Company is the sole managing member for Solaris LLC and consolidates entities in which it has a controlling financial interest. The financial statements for periods prior to the IPO have been adjusted to combine the previously separate entities for presentation purposes. Thus, for periods prior to the completion of the Offering, the accompanying consolidated financial statements include the historical financial position and results of operations of Solaris LLC and its subsidiaries. All material intercompany transactions and balances have been eliminated upon consolidation. |
Use of Estimates | Use of Estimates The preparation of 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 consolidated financial statements include, but are not limited to, stock-based compensation, depreciation associated with property, plant and equipment and related impairment considerations of those assets, determination of fair value of intangible assets acquired in business combinations 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. |
Cash | Cash For the purposes of the statements of cash flows, the Company considers all short-term, highly liquid, investments with an original maturity of three months or less to be cash equivalents. Cash is deposited in demand accounts in federally insured domestic institutions to minimize risk. Accounts of each institution are insured by Federal Deposit Insurance Corporation. Cash balances at times may exceed federally-insured limits. We have not incurred losses related to these deposits. |
Accounts Receivable | Accounts Receivable Accounts receivable consists of trade receivables recorded at the invoice amount, plus accrued revenue that is earned but not yet billed, less an estimated allowance for doubtful accounts (if any). Accounts receivable are generally due within 60 days or less, or in accordance with terms agreed with customers. The Company considers accounts outstanding longer than the payment terms past due. The Company determines the allowance by considering a number of factors, including the length of time trade accounts receivable are past due, previous loss history, the customer’s current ability to pay its obligation, and the condition of the general economy and the industry as a whole. Accounts receivable are written off when they are deemed uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. Allowance for doubtful accounts was zero as of December 31, 2018 and 2017. |
Inventories | 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. Detail reviews are performed related to net realizable value, giving consideration to quality, excessive levels, obsolescence and other factors. Adjustments that reduce stated amounts will be recognized as impairments in the consolidated statements of operations. There were no impairments recorded for the years ended December 31, 2018, 2017 and 2016. |
Business Combinations | Business Combinations The Company accounts for business combinations using the acquisition method of accounting. Under this method, acquired assets, including separately identifiable intangible assets and any assumed liabilities, are recorded at their acquisition date estimated fair value. The excess of purchase price over the fair value amounts assigned to the assets acquired and liabilities assumed represents the goodwill amount resulting from the acquisition. Determining the fair value of assets acquired and liabilities assumed involves the use of significant estimates and assumptions. Additional information regarding the Company’s business combinations is presented in Note 3. “–Business Combinations.” |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are stated at cost, or fair value for assets acquired in a business combination, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful service lives of the assets as noted below: Useful Life Systems and related equipment Up to 15 years Machinery and equipment 3-10 years Furniture and fixtures 5 years Computer hardware 3 years Computer software 5-10 years Vehicles 5 years Transloading facility and equipment 15-30 years Buildings and leasehold improvements 15 years Systems that are in the process of being manufactured and the cost of construction in process at our Kingfisher Facility are considered property, plant and equipment. However, the systems and construction in process do not depreciate until they are fully completed. Systems and construction in process are a culmination of material, labor and overhead. Expenditures for maintenance and repairs are charged against income (loss) as incurred. Betterments that increase the value or materially extend the life of the related assets are capitalized. Upon sale or disposition of property and equipment, the cost and related accumulated depreciation and amortization are removed from the consolidated financial statements and any resulting gain or loss is recognized in the consolidated statements of operations. |
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, LLC (“Railtronix”) as described further in Note 3, as well as patents that were filed for our systems and other intellectual property. Amortization expense of identified intangibles is expected to be approximately $770 in each of the next five years. Amortization on these assets is calculated on the straight-line method over the estimated useful lives of the assets, which is five to fifteen years based on estimates the Company believes are reasonable. The Company recorded amortization expense of $801, $46 and $1 for the years ended December 31, 2018, 2017 and 2016, respectively. Identified intangible assets by major classification consist of the following: Accumulated Net Book Gross Amortization Value As of December 31, 2018: Customer relationships $ 4,703 $ (727) $ 3,976 Software acquired in the acquisition of Railtronix 346 (54) 292 Non-competition agreement 225 (49) 176 Patents and other 114 (18) 96 Total identifiable intangibles $ 5,388 $ (848) $ 4,540 As of December 31, 2017: Customer relationships $ 4,703 $ (36) $ 4,667 Software acquired in the acquisition of Railtronix 346 (3) 343 Non-competition agreement 225 (3) 222 Patents and other 108 (5) 103 Total identifiable intangibles $ 5,382 $ (47) $ 5,335 |
Goodwill | Goodwill Goodwill represents the excess of the purchase price of a business over the estimated fair value of the identifiable assets acquired and liabilities assumed. As of December 31, 2018 and 2017, the Company reported $17,236 of goodwill related to the 2014 purchase of the silo manufacturing business from Loadcraft Industries Ltd. and the 2017 purchase of the assets of Railtronix (See Note 3. “–Business Combinations”). The Company evaluates goodwill for impairment annually, as of October 31, or more often as facts and circumstances warrant. Factors such as unexpected adverse economic conditions, competition and market changes may require more frequent assessments. There was no impairment for the years ended December 31, 2018, 2017 and 2016. Before employing detailed impairment testing methodologies, the Company may first evaluate the likelihood of impairment by considering qualitative factors relevant to the business, such as macroeconomic, industry, market or any other factors that have a significant bearing on fair value. If the Company first utilizes a qualitative approach and determines that it is more likely than not that goodwill is impaired, detailed testing methodologies are then applied. Otherwise, the Company concludes that no impairment has occurred. The Company may also choose to bypass a qualitative approach and opt instead to employ detailed testing methodologies, regardless of a possible more likely than not outcome. If the Company determines through the qualitative approach that detailed testing methodologies are required, or if the qualitative approach is bypassed, the Company compares the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. |
Impairment of Long-Lived Assets and Definite-lived Intangible Assets | Impairment of Long-Lived Assets and Definite-lived Intangible Assets Long-lived assets, such as property, plant, equipment and definite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, such as insufficient cash flows or plans to dispose of or sell long-lived assets before the end of their previously estimated useful lives. If the carrying amount is not recoverable, the Company recognizes an impairment loss equal to the amount by which the carrying amount exceeds fair value. The Company estimates fair value based on projected future discounted cash flows. Fair value calculations for long-lived assets and intangible assets contain uncertainties because it requires the Company to apply judgment and estimates concerning future cash flows, strategic plans, useful lives and market performance. The Company also applies judgment in the selection of a discount rate that reflects the risk inherent in the current business model. There was no impairment for the years ended December 31, 2018, 2017 and 2016. |
Revenue Recognition | Revenue Recognition The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, which the Company adopted effective January 1, 2018. The Company applied ASC Topic 606 to all contracts with customers and did not elect practical expedients upon adoption of the standard. No cumulative adjustment to accumulated earnings was required as a result of this adoption, and the adoption did not have a material impact on our consolidated financial statements as no material arrangements prior to the adoption were impacted under the new pronouncement . In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under the agreement, the following steps must be performed at contract inception: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) we satisfy each performance obligation. Revenues from system rental consist primarily of fixed monthly fees charged to customers for the use of our patented mobile proppant management systems that unload, store and deliver proppant at oil and natural gas well sites as well as the use of our proprietary inventory management system, Solaris Lens, which enables our customers to track inventory levels in, and delivery rates from, each silo in a system on a remote and digital basis, both of which are considered to be separate performance obligations. Contracts with customers are typically on thirty- to sixty-day payment terms. Revenues are recognized over time as the performance obligations are satisfied under the terms of the customer contract. We determined that the performance obligation is satisfied over time as the customer simultaneously receives and consumes the benefits provided by the entity’s performance of services, typically as our systems are used by the customer. We measure progress using an input method based on resources consumed or expended relative to the total resources expected to be consumed or expended. We typically charge our customers for the rental of our systems on a monthly basis under agreements requiring the rental of a minimum number of systems for a period of twelve months. The Company is typically entitled to short fall payments if such minimum contractual obligations are not maintained by our customers. Minimum contractual obligations have been maintained and thus the Company has not recognized revenues related to shortfalls on such take or pay contractual obligations to date. Revenues from system services consist primarily of the fees charged to customers for services including mobilization and transportation of our systems, field supervision and support and services coordinating proppant delivery to systems, each of which are considered to be separate performance obligations. Contracts with customers are typically on thirty- to sixty-day payment terms. Revenues are recognized over time as the performance obligations are satisfied under the terms of the customer contract. We determined that the performance obligation for system services including field supervision and support is satisfied over time as the customer simultaneously receives and consumes the benefits provided by the entity’s performance of the services, typically based on fixed weekly or monthly contractual rates for field supervision and support and when the Company provides services coordinating proppant delivery. We measure progress using an input method based on resources consumed or expended relative to the total resources expected to be consumed or expended. When the Company provides mobilization and transportation of our systems on behalf of our customers, we determined that the performance obligation is satisfied at a point in time when the system has reached its intended destination. Revenues from transloading services consist primarily of the fees charged to customers for transloading proppant at our transloading facility, which is considered to be our performance obligation. Transloading services operations commenced in January 2018. We provide rail-to-truck transloading and high-efficiency sand silo storage and transloading services at the facility. Contracts with customers are typically on thirty- to sixty-day payment terms. Revenues are typically recognized over time as the customer simultaneously receives and consumes the benefits provided by the entity’s performance of the transloading service based on a throughput fee per ton rate for proppant delivered to and transloaded at the facility. We measure progress based on the products delivered and transloaded at the facility. Under one of our agreements at the facility, quarterly minimum throughput volumes are required and the Company is entitled to short fall payments if such minimum quarterly contractual obligations are not maintained. These shortfalls are based on fixed minimum volumes at a fixed rate and are recognized over time as throughput volumes transloaded are below minimum throughput volumes required. Revenues from inventory software services consist primarily of the fees charged to customers for the use of our Railtronix inventory management software, which is considered to be our performance obligation. The Railtronix inventory management software was acquired in December 2017. Revenues are recognized over time as the customer simultaneously receives and consumes the benefits provided by the entity’s performance based on a throughput fee to monitor proppant that is loaded into a railcar, stored at a transload facility or loaded into a truck. |
Deferred Revenue | Deferred Revenue Deferred revenue consists of a $25,980 partial termination payment received in accordance with a contract modification which is accounted for prospectively. The partial termination payment represents the distinct unsatisfied portion of a contract to provide transloading services and are considered part of the transaction price and will be allocated to the remaining performance obligations under the contract. The Company recognized $522 of deferred revenue as Revenue from transloading services in the year ended December 31, 2018, resulting in $25,458 remaining deferred revenue as of December 31, 2018, which will be recognized over the remaining two-year term of the modified agreement. No deferred revenue was recorded or recognized as revenue during the year ended December 31, 2017. |
Unbilled Receivables | Unbilled Receivables Revenues recognized in advance of invoice issuance create assets referred to as “unbilled receivables.” These assets are presented on a combined basis with accounts receivable and are converted to accounts receivable once billed. |
Stock-based Compensation | Stock-based Compensation The Company accounts for its stock-based compensation including grants of restricted stock and options in the consolidated statements of operations based on their estimated fair values. The Company recognizes expense on a straight-line basis over the awards’ vesting period, which is generally the requisite service period. Solaris LLC previously sponsored a stock-based management compensation program called the 2015 Membership Unit Option Plan (the “Plan”). Solaris LLC accounted for the units under the Plan as compensation cost measured at the fair value of the award on the date of grant using the Black-Scholes option-pricing model. In connection with the Offering, the options granted under the Plan were modified by a conversion into options under the Solaris Long-Term Incentive Plan (the “LTIP”). Refer also to Note 9. “–Equity”. |
Research and Development | Research and Development The Company expenses research and development costs as incurred, which is included in selling, general and administrative expenses in the consolidated statements of operations. For the years ended December 31, 2018, 2017 and 2016, research and development costs were $0, $210 and $476, respectively. |
Financial Instruments | Financial Instruments The carrying value of the Company’s financial instruments, consisting of cash, accounts receivable, notes receivable, accounts payable, insurance premium financing and accrued expenses, approximates their fair value due to the short maturity of such instruments. Financial instruments also consist of a revolving credit facility and term loans, for which fair value approximates carrying value as the debt bears interest at a variable rate which is reflective of current rates otherwise available to the Company. As of December 31, 2018, we had $13,000 of borrowings under the 2018 Credit Agreement (as defined below) outstanding. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. |
Fair Value Measurements | Fair Value Measurements The Company’s financial assets and liabilities are to be measured using inputs from the three levels of the fair value hierarchy, of which the first two are considered observable and the last unobservable, which are as follows: · Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date; · Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or other inputs corroborated by observable market data for substantially the full term of the assets or liabilities; and · Level 3—Unobservable inputs that reflect the Company’s assumptions that market participants would use in pricing assets or liabilities based on the best information available. |
Income Taxes | Income Taxes Solaris Inc. is a corporation and, as a result, is subject to United States federal, state and local income taxes. For the years ended December 31, 2018 and 2017, we recognized a combined United States federal and state provision for income taxes of $12,961 and $25,899, respectively. On December 22, 2017, Public Law No. 115-97, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law. The provisions of the Tax Act that impact us include, but are not limited to, (1) reducing the United States federal corporate income tax rate from 35% to 21%, (2) eliminating the corporate alternative minimum tax (AMT); (3) allowing business to immediately expense the cost of new investments in certain qualified depreciable assets acquired after September 27, 2017 (with a phase-down of such expensing starting in 2023); and (4) reducing the maximum deduction for net operating loss (NOL) carryforwards generated in tax years beginning after December 31, 2017 to 80% of a taxpayer’s taxable income. In conjunction with the Tax Act, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. We previously reported provisional amounts of the income tax effects of the Tax Act for which the accounting was incomplete, but a reasonable estimate could be determined. During the year ended December 31, 2018, our accounting for the income tax effects of the Tax Act was completed without material changes to the previously provided estimates. Solaris LLC is treated as a partnership for United States federal income tax purposes and therefore does not pay federal income tax on its taxable income. Instead, the Solaris LLC members are liable for federal income tax on their respective shares of the Company’s taxable income reported on the members’ federal income tax returns. Our revenues are derived through transactions in several states, which may be subject to state and local taxes. Accordingly, we have recorded a liability for state and local taxes that management believes is adequate for activities as of December 31, 2018 and 2017. We are subject to a franchise tax imposed by the State of Texas. The franchise tax rate is 1%, calculated on taxable margin. Taxable margin is defined as total revenue less deductions for cost of goods sold or compensation and benefits in which the total calculated taxable margin cannot exceed 70% of total revenue. Current expenses related to Texas franchise tax were approximately $684,000, $247,000 and $43,000 for the years ended December 31, 2018, 2017 and 2016. We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events included in the consolidated financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the book value and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period in which the enactment date occurs. We recognize deferred tax assets to the extent we believe these assets are more-likely-than-not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent results of operations. We record uncertain tax positions on the basis of a two-step process in which (1) we determine whether it is more-likely-than-not the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions meeting the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. Interest and penalties related to income taxes are included in the benefit (provision) for income taxes in our consolidated statement of operations. We have not incurred any significant interest or penalties related to income taxes in any of the periods presented. See Note 10. “–Income Taxes” for additional information regarding income taxes. |
Payable Related to the Tax Receivable Agreement | Payable Related to the Tax Receivable Agreement In connection with the IPO, Solaris Inc. entered into a Tax Receivable Agreement (the “Tax Receivable Agreement”) with the members of Solaris LLC immediately prior to the IPO (each such person and any permitted transferee, a “TRA Holder,” and together, the “TRA Holders”) on May 17, 2017. This agreement generally provides for the payment by Solaris Inc. to each TRA Holder of 85% of the net cash savings, if any, in United States federal, state and local income tax or franchise tax that Solaris Inc. actually realizes (computed using simplifying assumptions to address the impact of state and local taxes) or is deemed to realize in certain circumstances in periods after the IPO as a result of (i) certain increases in tax basis that occur as a result of Solaris Inc.’s acquisition (or deemed acquisition for United States federal income tax purposes) of all or a portion of such TRA Holder's Solaris LLC Units in connection with the Reorganization Transactions or pursuant to the exercise of the Redemption Right or the Call Right (each as defined in the Solaris LLC Agreement) and (ii) imputed interest deemed to be paid by Solaris Inc. as a result of, and additional tax basis arising from, any payments Solaris makes under the Tax Receivable Agreement. Solaris Inc. will retain the benefit of the remaining 15% of these cash savings. As of December 31, 2018 and 2017, Solaris Inc. recorded a payable related to the Tax Receivable Agreement of $56,149 and $24,675, 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. |
Environmental Matters | Environmental Matters The Company is subject to various federal, state and local laws and regulations relating to the protection of the environment. Management has established procedures for the ongoing evaluation of the Company’s operations, to identify potential environmental exposures and to comply with regulatory policies and procedures. Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations and do not contribute to current or future revenue generation are expensed as incurred. Liabilities are recorded when environmental costs are probable, and the costs can be reasonably estimated. The Company maintains insurance which may cover in whole or in part certain environmental expenditures. As of December 31, 2018 and 2017, there were no environmental matters deemed probable. |
Segment Information | Segment Information Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker is the Chief Executive Officer. The Company and the Chief Executive Officer view the Company’s operations and manage its business as one operating segment. All long-lived assets of the Company reside in the United States. |
Recent Accounting Standards | Accounting Standards Recently Adopted In February 2017, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2017‑05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610‑20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets ("ASU 2017‑05"). ASU 2017‑05 clarifies the scope of Subtopic 610‑20 and adds guidance for partial sales of nonfinancial assets. Subtopic 610‑20 was issued in May 2014 as part of ASU No. 2014‑09, Revenue from Contracts with Customers (Topic 606) and provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. The amendments in ASU 2017‑05 clarify that a financial asset is within the scope of Subtopic 610‑20 if it meets the definition of an in substance nonfinancial asset. The amendments also clarify that nonfinancial assets within the scope of Subtopic 610‑20 may include nonfinancial assets transferred within a legal entity to a counterparty. The amendments in ASU 2017‑05 are effective at the same time as the amendments in ASU 2014‑09, which are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted for interim or annual reporting periods beginning after December 15, 2016. An entity may elect to apply the amendments in ASU 2017‑05 either retrospectively to each period presented in the financial statements in accordance with the guidance on accounting changes (retrospective approach) or retrospectively with a cumulative effect adjustment to retained earnings as of the beginning of the fiscal year of adoption (modified retrospective approach). The Company adopted ASU 2017-05 during the quarter ended March 31, 2018 using the modified retrospective approach. Adoption of this ASU did not impact the Company’s opening balance of retained earnings as of January 1, 2018 as our reported results did not differ under the new revenue standard and the previous guidance. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash ("ASU 2016-18"). ASU 2016-18 is intended to add and clarify guidance on the classification and presentation of restricted cash on the statement of cash flows. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted ASU 2016-18 during the quarter ended March 31, 2018, which did not have an impact on the consolidated financial statements. In August 2016, the FASB issued ASU 2016‑15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"), seeking to eliminate diversity in practice related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in ASU 2016‑15 address eight specific cash flow issues and apply to all entities, including both business entities and not-for-profit entities that are required to present a statement of cash flows under FASB ASC 230, Statement of Cash Flows. The amendments in ASU 2016‑15 are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted ASU 2016-15 during the quarter ended March 31, 2018, which did not have an impact on the consolidated financial statements. Accounting Standards Recently Issued But Not Yet Adopted In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), modifies the disclosure requirements in Topic 820, Fair Value Measurement, by removing certain disclosure requirements related to the fair value hierarchy, modifying existing disclosure requirements related to measurement uncertainty and adding new disclosure requirements, such as disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and disclosing the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments in ASU 2018-13 are effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. We are currently in the process of evaluating the impact, if any, that ASU 2018-13 will have on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), as part of a joint project with the International Accounting Standards Board to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. To satisfy the foregoing objective, the FASB is creating Topic 842, Leases, which supersedes Topic 840. Under the new guidance, a lessee will be required to recognize right-of-use (“ROU”) assets and lease liabilities for capital and operating leases with lease terms of more than 12 months. Additionally, this ASU will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), Targeted Improvements (“ASU 2018-11”), which provides an optional practical expedient to adopt the new lease requirements through a cumulative effect adjustment in the period of adoption. The Company will adopt ASU 2016-02 using the new optional transition guidance during the quarter ended March 31, 2019. The Company will elect the available practical expedients on adoption. In preparation for adoption of the standard, the Company has implemented internal controls and key system functionality to enable the preparation of financial information. ASU 2016-02 will have a material impact on the Company’s consolidated balance sheets, but will not have a material impact on its consolidated statements of operations nor to cash from or used in operating, financing, or investing on the Company’s consolidated cash flow statements. The most significant impact will be the recognition of ROU assets, lease liabilities and a cumulative effect adjustment to retained earnings for operating leases, while the Company’s accounting for capital leases remains substantially unchanged. Adoption of ASU 2016-02 will result in the recognition of ROU assets, lease liabilities and a cumulative adjustment to retained earnings of approximately $9.4 million, $9.7 million and $0.5 million, respectively. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Schedule of useful life of property, plant and equipment | Useful Life Systems and related equipment Up to 15 years Machinery and equipment 3-10 years Furniture and fixtures 5 years Computer hardware 3 years Computer software 5-10 years Vehicles 5 years Transloading facility and equipment 15-30 years Buildings and leasehold improvements 15 years |
Schedule of intangible assets by major classification | Accumulated Net Book Gross Amortization Value As of December 31, 2018: Customer relationships $ 4,703 $ (727) $ 3,976 Software acquired in the acquisition of Railtronix 346 (54) 292 Non-competition agreement 225 (49) 176 Patents and other 114 (18) 96 Total identifiable intangibles $ 5,388 $ (848) $ 4,540 As of December 31, 2017: Customer relationships $ 4,703 $ (36) $ 4,667 Software acquired in the acquisition of Railtronix 346 (3) 343 Non-competition agreement 225 (3) 222 Patents and other 108 (5) 103 Total identifiable intangibles $ 5,382 $ (47) $ 5,335 |
Business Combinations (Tables)
Business Combinations (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations | |
Schedule of pro forma results | For the Year Ended For the Year Ended December 31, 2017 December 31, 2016 Actual Pro Forma Actual Pro Forma Pro forma (unaudited) Total revenues $ 67,395 $ 69,252 $ 18,157 $ 19,192 Net income 22,487 23,017 2,803 2,496 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Prepaid Expenses and Other Current Assets. | |
Schedule of prepaid expenses and other current assets | 2018 2017 Prepaid purchase orders $ 2,802 $ 2,731 Prepaid insurance 576 389 Deposits 882 261 Other assets 1,232 241 Prepaid expenses and other current assets $ 5,492 $ 3,622 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment. | |
Schedule of property plant and equipment | 2018 2017 Systems and related equipment $ 254,795 $ 116,307 Systems in process 11,245 6,043 Transloading facility and equipment 40,218 — Transloading facility construction in process — 28,729 Computer and related equipment 4,990 2,455 Machinery and equipment 5,126 4,396 Vehicles 8,334 4,577 Buildings 4,280 3,251 Land 612 578 Furniture and fixtures 282 91 Property, plant and equipment, gross 329,882 166,427 Less: accumulated depreciation (33,344) (15,264) Property, plant and equipment, net $ 296,538 $ 151,163 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accrued Liabilities | |
Schedule of accrued liabilities | 2018 2017 Property, plant and equipment $ 2,153 $ 7,612 Employee related expenses 4,500 4,829 Selling, general and administrative 944 1,507 Cost of revenue 2,702 825 Excise, franchise and sales taxes 1,461 608 Ad valorem taxes 774 15 Other 124 72 Accrued liabilities $ 12,658 $ 15,468 |
Capital Leases (Tables)
Capital Leases (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Capital Leases | |
Schedule of future principal minimum payments under capital lease agreements | Amount 2019 $ 35 2020 35 2021 33 2022 33 2023 33 Thereafter 40 Total payments 209 Less: amount representing imputed interest at 3.25% (20) Present value of payments 189 Less: current portion (35) Capital lease obligation, net of current portion $ 154 |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity | |
Schedule of assumptions used to determine compensation costs for options granted | 2017: Expected volatility 37.84 % Expected term (years) 4.97 Expected annual dividend yield — % Expected risk-free rate of return 1.42 % |
Summary of the option activity | Options Outstanding Weighted Average Weighted Remaining Aggregate Average Exercise Contractual Intrinsic Value Options Price Term (years) (in thousands) Balance, January 1, 2016 14,596 $ 135.00 9.66 $ — Granted — — — Exercised — — — Forfeited (1,658) 135.00 — Balance, December 31, 2016 12,938 $ 135.00 8.67 $ — Exercisable, December 31, 2016 3,235 $ 135.00 8.67 $ — Canceled (12,938) 135.00 — Granted 591,261 2.87 — Exercised (91,484) 2.87 — Forfeited (33,346) 2.87 — Balance, December 31, 2017 466,431 $ 2.87 6.79 $ — Exercisable, December 31, 2017 466,431 $ 2.87 6.79 $ — Canceled — — — Granted — — — Exercised (327,594) 2.87 — Forfeited — — — Balance, December 31, 2018 138,837 $ 2.87 7.92 $ — Exercisable, December 31, 2018 138,837 $ 2.87 7.92 $ — |
Summary of activity related to restricted stock | Restricted Stock Awards Weighted Average Grant Date Fair Number of Shares Value ($) Issued on May 17, 2017 648,676 $ 12.04 Awarded 584,477 13.25 Vested — — Forfeited (14,888) 12.87 Unvested at December 31, 2017 1,218,265 $ 12.61 Awarded 88,664 16.92 Vested (644,387) 12.58 Forfeited (251,045) 12.49 Unvested at December 31, 2018 411,497 $ 13.67 |
Schedule of earnings per share calculation | Year Ended December, Basic net income per share: 2018 2017 Numerator Net income attributable to Solaris $ 42,431 $ 3,636 Less income attributable to participating securities (1) (1,230) (248) Net income attributable to common stockholders $ 41,201 $ 3,388 Denominator Weighted average number of unrestricted outstanding common shares used to calculate basic net income per share 25,678 12,117 Effect of dilutive securities: Stock options (2) 151 365 Diluted weighted-average shares of Class A common stock outstanding used to calculate diluted net income per share 25,829 12,482 Earnings per share of Class A common stock - basic $ 1.60 $ 0.28 Earnings per share of Class A common stock - diluted $ 1.59 $ 0.27 (1) The Company's restricted shares of common stock are participating securities. (2) The years ended December 31, 2018 and 2017 include 151 shares and 365 shares, respectively, of Class A common stock resulting from an assumed exercise of the stock options in the calculation of the denominator for diluted earnings per common share as these shares were dilutive. |
Schedule of antidilutive shares | Year Ended December, 2018 2017 Class B common stock 20,727 31,100 Restricted stock awards 412 225 Total 21,139 31,325 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Schedule of components of income tax expense | Year Ended December 31, 2018 2017 2016 Current: Federal $ — $ — $ — State 684 247 43 684 247 43 Deferred: Federal 11,410 24,385 — State 867 1,267 — 12,277 25,652 — Income tax expense $ 12,961 $ 25,899 $ 43 |
Schedule of income tax expense differs from the amount computed by applying the statutory federal income tax rate | Year Ended December 31, 2018 2017 2016 Income before income taxes $ 98,913 $ 48,386 $ 2,846 Less: net income prior to corporate reorganization — 3,665 2,846 Less: net income before income taxes attributable to noncontrolling interest 43,521 15,439 — Income attributable to Solaris Oilfield Infrastructure, Inc. stockholders before income taxes 55,392 29,282 — Income tax expense (benefit) at the federal statutory rate 11,632 10,249 — State income taxes, net of federal benefit 1,373 1,071 43 Remeasurement of federal deferred tax assets due to rate change — 22,637 — Tax Receivable Agreement adjustments — (8,058) — Other (44) — — Income tax (benefit) expense $ 12,961 $ 25,899 $ 43 |
Schedule of deferred tax assets and liabilities | December 31, 2018 2017 Assets: Investments in subsidiaries $ — $ 20,219 Imputed interest 1,366 612 Net operating loss carryforward 41,648 5,493 Total deferred tax assets 43,014 26,324 Liabilities: Investments in subsidiaries 17,575 — Total deferred tax liabilities 17,575 — Net deferred tax asset $ 25,439 $ 26,324 |
Schedule of changes in gross unrecognized tax benefits | Year Ended December 31, 2018 2017 2016 Balance, January 1, $ 812 $ — $ — Additions for the current year tax — 812 — Additions related to prior years 4 — — Reductions related to settlements with taxing authorities — — — Reductions related to lapses in statute of limitations — — — Reductions related to prior years — — — Balance, December 31, $ 816 $ 812 $ — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies | |
Schedule of future minimum payments under non-cancelable operating leases | Year Ending December 31, Amount 2019 $ 1,432 2020 1,375 2021 1,299 2022 1,093 2023 1,092 Thereafter 9,725 Total minimum lease payments $ 16,016 |
Selected Quarterly Financial _2
Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Selected Quarterly Financial Data (Unaudited) | |
Schedule of Selected Quarterly Financial Data | Three Months Ended March 31, June 30, September 30, December 31, (in thousands, except per share amounts) 2018 Total revenue $ 36,018 $ 47,155 $ 56,686 $ 57,337 Operating income 15,526 24,796 30,790 28,175 Net income 13,415 21,448 26,437 24,652 Net income attributable to Solaris 5,930 10,597 13,019 12,885 Earnings per share of Class A common stock - basic $ 0.24 $ 0.40 $ 0.49 $ 0.47 Earnings per share of Class A common stock - diluted $ 0.23 $ 0.40 $ 0.49 $ 0.47 2017 Total revenue $ 10,324 $ 13,389 $ 18,478 $ 25,204 Operating income 4,825 1,670 8,082 10,884 Net income 4,782 1,062 7,406 9,237 Net income attributable to Solaris — 157 1,379 2,100 Earnings per share of Class A common stock - basic (1) $ — $ 0.01 $ 0.13 $ 0.13 Earnings per share of Class A common stock - diluted (1) $ — $ 0.01 $ 0.12 $ 0.13 (1) Represents earnings per share of Class A common stock and weighted-average shares of Class A common stock outstanding for the period from May 17, 2017 through December 31, 2017, the period following the Reorganization Transactions and IPO. See Note 9. “–Equity.” |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Allowance for doubtful accounts | $ 0 | $ 0 | |
Inventory impairment | $ 0 | $ 0 | $ 0 |
Maximum | |||
Accounts receivable due period | 60 days |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Property (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Systems and related equipment | Maximum | |
Property, Plant and Equipment | |
Property, plant and equipment useful life | 15 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment | |
Property, plant and equipment useful life | 3 years |
Machinery and equipment | Maximum | |
Property, Plant and Equipment | |
Property, plant and equipment useful life | 10 years |
Furniture and fixtures | |
Property, Plant and Equipment | |
Property, plant and equipment useful life | 5 years |
Computer and related equipment | |
Property, Plant and Equipment | |
Property, plant and equipment useful life | 3 years |
Computer software | Minimum | |
Property, Plant and Equipment | |
Property, plant and equipment useful life | 5 years |
Computer software | Maximum | |
Property, Plant and Equipment | |
Property, plant and equipment useful life | 10 years |
Vehicles | |
Property, Plant and Equipment | |
Property, plant and equipment useful life | 5 years |
Transloading facility and equipment | Minimum | |
Property, Plant and Equipment | |
Property, plant and equipment useful life | 15 years |
Transloading facility and equipment | Maximum | |
Property, Plant and Equipment | |
Property, plant and equipment useful life | 30 years |
Buildings and leasehold improvements | |
Property, Plant and Equipment | |
Property, plant and equipment useful life | 15 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Intangibles (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Intangible assets by major classification | |||
2,019 | $ 770 | ||
2,020 | 770 | ||
2,021 | 770 | ||
2,022 | 770 | ||
2,023 | 770 | ||
Intangible amortization expense | 801 | $ 46 | $ 1 |
Gross | 5,388 | 5,382 | |
Accumulated Amortization | (848) | (47) | |
Net Book Value | 4,540 | 5,335 | |
Goodwill | 17,236 | 17,236 | |
Goodwill impairment | 0 | 0 | 0 |
Impairment of long-lived assets | 0 | 0 | 0 |
Impairment of definite-lived intangible assets | 0 | 0 | $ 0 |
Customer relationships | |||
Intangible assets by major classification | |||
Gross | 4,703 | 4,703 | |
Accumulated Amortization | (727) | (36) | |
Net Book Value | 3,976 | 4,667 | |
Computer software | |||
Intangible assets by major classification | |||
Gross | 346 | 346 | |
Accumulated Amortization | (54) | (3) | |
Net Book Value | 292 | 343 | |
Non-competition agreement | |||
Intangible assets by major classification | |||
Gross | 225 | 225 | |
Accumulated Amortization | (49) | (3) | |
Net Book Value | 176 | 222 | |
Patents and other | |||
Intangible assets by major classification | |||
Gross | 114 | 108 | |
Accumulated Amortization | (18) | (5) | |
Net Book Value | $ 96 | $ 103 | |
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 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue Recognition | ||
Retained Earnings (Accumulated Deficit) | $ 43,317 | $ 3,636 |
System rental | Minimum | ||
Revenue Recognition | ||
Payment terms | 30 days | |
System rental | Maximum | ||
Revenue Recognition | ||
Payment terms | 60 days | |
System services | Minimum | ||
Revenue Recognition | ||
Payment terms | 30 days | |
System services | Maximum | ||
Revenue Recognition | ||
Payment terms | 60 days | |
Transloading services | Minimum | ||
Revenue Recognition | ||
Payment terms | 30 days | |
Transloading services | Maximum | ||
Revenue Recognition | ||
Payment terms | 60 days |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Deferred Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Summary of Significant Accounting Policies | ||
Termination payment received | $ 25,980 | |
Deferred revenue recognized | 522 | $ 0 |
Remaining deferred revenue | $ 25,458 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Remaining Performance Obligation (Details) | Dec. 31, 2018 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | |
Summary of Significant Accounting Policies | |
Remaining performance obligation, terms | 2 years |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Misc (Details) | May 17, 2017 | Dec. 31, 2018USD ($)segment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Research and development expense | $ 0 | $ 210,000 | $ 476,000 | |
U.S. federal corporate tax rate | 21.00% | 35.00% | ||
Provision for income taxes | $ 12,961,000 | $ 25,899,000 | 43,000 | |
Payables related to Tax Receivable Agreement | 56,149,000 | 24,675,000 | ||
Environmental matters deemed probable | $ 0 | 0 | ||
Number of operating segments | segment | 1 | |||
Credit facility | ||||
Outstanding credit facility | $ 13,000,000 | |||
Texas | ||||
Provision for income taxes | $ 684,000 | 247,000 | $ 43,000 | |
Franchise tax rate (as a percent) | 1.00% | |||
Maximum taxable margin (as a percent) | 70.00% | |||
Tax Receivable Agreement | ||||
Payments of net cash saving (as a percent) | 85.00% | 85.00% | ||
Payables related to Tax Receivable Agreement | $ 56,149,000 | $ 24,675,000 | ||
Benefit of remaining cash savings (as a percent) | 15.00% |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - New ASU (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Summary of Significant Accounting Policies | ||
Retained earnings | $ 43,317 | $ 3,636 |
ASU No. 2016-02, Leases | Proforma adjustment | ||
Summary of Significant Accounting Policies | ||
ROU assets | 9,400 | |
Lease liabilities | 9,700 | |
Retained earnings | $ 500 |
Business Combinations (Details)
Business Combinations (Details) $ / shares in Units, $ in Thousands | Dec. 06, 2017USD ($)$ / sharesshares | Mar. 31, 2018USD ($) | Mar. 31, 2018USD ($)item | Dec. 31, 2018USD ($)item | Dec. 31, 2017USD ($) |
Business Combination | |||||
Equity consideration | $ 4,505 | ||||
Fair value | |||||
Goodwill | $ 17,236 | 17,236 | |||
Pro forma information | |||||
Revenue, since acquisition date | 67,395 | 18,157 | |||
Net income, since acquisition date | 22,487 | 2,803 | |||
Unaudited pro forma revenue | 69,252 | 19,192 | |||
Unaudited pro forma net income | 23,017 | 2,496 | |||
Railtronix LLC | |||||
Business Combination | |||||
Total consideration | $ 9,505 | ||||
Cash consideration | 5,000 | ||||
Equity consideration | 4,505 | ||||
Fair value | |||||
Goodwill | 4,237 | ||||
Pro forma information | |||||
Revenue, since acquisition date | 205 | ||||
Net income, since acquisition date | $ 87 | ||||
Performance-based cash awards liability | 2,500 | $ 875 | |||
Number of completed milestones | item | 1 | 1 | |||
Contingent consideration payment | $ 1,625 | $ 1,625 | |||
Railtronix LLC | Customer relationships | |||||
Fair value | |||||
Identifiable intangible assets | 4,697 | ||||
Railtronix LLC | Non-competition agreement | |||||
Fair value | |||||
Identifiable intangible assets | 225 | ||||
Railtronix LLC | Software | |||||
Fair value | |||||
Identifiable intangible assets | $ 346 | ||||
Railtronix LLC | Class B Common Stock | |||||
Business Combination | |||||
Equity consideration (in shares) | shares | 279,655 | ||||
Railtronix LLC | Class A Common Stock | |||||
Business Combination | |||||
Closing price (in dollars per share) | $ / shares | $ 16.11 | ||||
LLC Units | Railtronix LLC | |||||
Business Combination | |||||
Equity consideration (in shares) | shares | 279,655 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Prepaid Expenses and Other Current Assets. | ||
Prepaid purchase orders | $ 2,802 | $ 2,731 |
Prepaid insurance | 576 | 389 |
Deposits | 882 | 261 |
Other assets | 1,232 | 241 |
Prepaid expenses and other current assets | $ 5,492 | $ 3,622 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment | ||
Property, plant and equipment, gross | $ 329,882 | $ 166,427 |
Less: accumulated depreciation | (33,344) | (15,264) |
Property, plant and equipment, net | 296,538 | 151,163 |
Systems and related equipment | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 254,795 | 116,307 |
Systems in process | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 11,245 | 6,043 |
Transloading facility and equipment | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 40,218 | |
Transloading facility construction in process | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 28,729 | |
Computer and related equipment | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 4,990 | 2,455 |
Machinery and equipment | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 5,126 | 4,396 |
Vehicles | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 8,334 | 4,577 |
Buildings | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 4,280 | 3,251 |
Land | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 612 | 578 |
Furniture and fixtures | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | $ 282 | $ 91 |
Property, Plant and Equipment -
Property, Plant and Equipment - Depreciation (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Jul. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment | ||||
Depreciation expense | $ 17,621 | $ 6,589 | $ 3,791 | |
Capitalized depreciation in property, plant and equipment | 688 | 668 | 674 | |
Selling, general and administrative expenses | ||||
Property, Plant and Equipment | ||||
Depreciation expense | 473 | 336 | 279 | |
Kingfisher Facility | ||||
Property, Plant and Equipment | ||||
Lease acquisition cost | $ 250 | |||
System rental | ||||
Property, Plant and Equipment | ||||
Depreciation expense | 14,920 | 5,792 | 3,352 | |
System services | ||||
Property, Plant and Equipment | ||||
Depreciation expense | 1,274 | 461 | 160 | |
Transloading services | ||||
Property, Plant and Equipment | ||||
Depreciation expense | $ 954 | $ 0 | $ 0 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Accrued Liabilities | ||
Property, plant and equipment | $ 2,153 | $ 7,612 |
Employee related expenses | 4,500 | 4,829 |
Selling, general and administrative | 944 | 1,507 |
Cost of revenue | 2,702 | 825 |
Excise, franchise and sales taxes | 1,461 | 608 |
Ad valorem taxes | 774 | 15 |
Other | 124 | 72 |
Accrued liabilities | $ 12,658 | $ 15,468 |
Capital Leases (Details)
Capital Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Capital lease installment | $ 3 | |
Imputed interest rate (as a percent) | 3.25% | |
Property, plant and equipment, gross | $ 329,882 | $ 166,427 |
Accumulated depreciation | 33,344 | 15,264 |
Capital lease future payments | ||
2,019 | 35 | |
2,020 | 35 | |
2,021 | 33 | |
2,022 | 33 | |
2,023 | 33 | |
Thereafter | 40 | |
Total payments | 209 | |
Less: amount representing imputed interest at 3.25% | (20) | |
Present value of payments | 189 | |
Less: current portion | (35) | (33) |
Capital lease obligations, net of current portion | 154 | 179 |
Capital Lease | ||
Property, plant and equipment, gross | 299 | 294 |
Accumulated depreciation | $ 85 | $ 64 |
Senior Secured Credit Facility
Senior Secured Credit Facility (Details) - USD ($) $ in Thousands | Jan. 19, 2018 | Jan. 31, 2019 | Dec. 31, 2017 | Dec. 31, 2018 |
Senior Secured Credit Facility | ||||
Repayment of senior secured credit facility | $ 5,500 | |||
Credit facility | ||||
Senior Secured Credit Facility | ||||
Outstanding credit facility | $ 13,000 | |||
Weighted average interest rate (as a percent) | 5.27% | |||
Cash adjustment to indebtedness and senior indebtedness ratio | $ 10,000 | |||
Percentage of cash adjustment to indebtedness and senior indebtedness ratio | 50 | |||
Maximum capital expenditures allowed in 2018 | $ 225,000 | |||
Maximum capital expenditures allowed in 2019 | $ 75,000 | |||
Credit facility | Subsequent Event | ||||
Senior Secured Credit Facility | ||||
Repayment of senior secured credit facility | $ 13,000 | |||
Credit facility | Minimum | ||||
Senior Secured Credit Facility | ||||
Indebtedness to consolidated EBITDA | 3.50 | |||
Senior indebtedness to consolidated EBITDA | 2.50 | |||
Ratio of consolidated EBITDA to fixed charges | 1.25% | |||
Credit facility | Beginning April 1, 2018 | ||||
Senior Secured Credit Facility | ||||
Indebtedness to consolidated EBITDA | 3.25 | |||
Senior indebtedness to consolidated EBITDA | 2.25 | |||
Credit facility | Beginning October 1, 2018 | ||||
Senior Secured Credit Facility | ||||
Indebtedness to consolidated EBITDA | 3 | |||
Senior indebtedness to consolidated EBITDA | 2 | |||
Credit facility | One-month LIBOR | Minimum | ||||
Senior Secured Credit Facility | ||||
Applicable margin rate | 3.00% | |||
Credit facility | One-month LIBOR | Maximum | ||||
Senior Secured Credit Facility | ||||
Applicable margin rate | 3.50% | |||
Revolving Facility | ||||
Senior Secured Credit Facility | ||||
Maximum borrowing | $ 20,000 | |||
Potential addition borrowing available | $ 10,000 | |||
Eligible inventory value (as a percent) | 35.00% | |||
Remaining borrowing capacity | $ 20,000 | |||
Revolving Facility | Minimum | ||||
Senior Secured Credit Facility | ||||
Commitment fee (as a percent) | 0.25% | |||
Revolving Facility | Maximum | ||||
Senior Secured Credit Facility | ||||
Commitment fee (as a percent) | 0.50% | |||
Advance Loan Facility | ||||
Senior Secured Credit Facility | ||||
Maximum borrowing | $ 50,000 | |||
Advance loan, as percentage of current net orderly liquidation value | 80.00% | |||
Remaining borrowing capacity | $ 50,000 |
Equity - Dividends (Details)
Equity - Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 27, 2018 | Dec. 17, 2018 | Dec. 31, 2018 |
Stock-based compensation | |||
Cash dividends paid per share | $ 0.10 | $ 0.10 | |
Distributions paid to unit holders | $ 4,713 | ||
Distributions paid to unit holders (in dollars per unit) | $ 0.10 | ||
Distribution received | $ 2,750 | ||
Dividend paid to common stock | 2,750 | ||
Dividends paid to restricted stock | $ 41 | ||
Solaris LLC | |||
Stock-based compensation | |||
Distributions paid to unit holders | $ 4,713 | ||
Distributions paid to unit holders (in dollars per unit) | $ 0.10 |
Equity - SBC (Details)
Equity - SBC (Details) - USD ($) $ / shares in Units, $ in Thousands | May 17, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Stock-based compensation | |||||
Options granted (in shares) | 591,261 | ||||
Options granted (in dollars per shares) | $ 2.87 | ||||
Cash received from option exercises | $ 932 | ||||
Tax benefit (expense) realized for the tax deductions from options exercised | $ 128 | ||||
Options exercised (in shares) | 327,594 | 91,484 | |||
Forfeited (in shares) | 33,346 | 1,658 | |||
Options outstanding (in shares) | 138,837 | 466,431 | 12,938 | 14,596 | |
Options | |||||
Stock-based compensation | |||||
Options granted (in shares) | 591,261 | ||||
Options granted (in dollars per shares) | $ 2.87 | ||||
Options grant date fair value (in dollars per shares) | $ 12.04 | ||||
Shares surrendered and recorded as treasury stock (in shares) | 539 | 16,354 | |||
Cash received from option exercises | $ 936 | $ 263 | |||
Tax benefit (expense) realized for the tax deductions from options exercised | $ 20 | ||||
Options exercised (in shares) | 419,078 | ||||
Forfeited (in shares) | 33,346 | ||||
Options outstanding (in shares) | 138,837 | ||||
Options | First vesting period | |||||
Stock-based compensation | |||||
Vesting (as a percent) | 25.00% | ||||
Options | Second vesting period | |||||
Stock-based compensation | |||||
Vesting (as a percent) | 25.00% | ||||
Class A Common Stock | |||||
Stock-based compensation | |||||
Reserved for issuance (in shares) | 5,118,080 | ||||
Class A Common Stock | Options | |||||
Stock-based compensation | |||||
Shares issued in exchange for options (in shares) | 327,594 | 75,130 |
Equity - Assumptions (Details)
Equity - Assumptions (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Assumptions | |||
Stock-based compensation expense | $ 3,861 | $ 3,701 | $ 127 |
Options | |||
Assumptions | |||
Expected volatility (as a percent) | 37.84% | ||
Expected term | 4 years 11 months 19 days | ||
Expected annual dividend yield (as a percent) | 0.00% | ||
Expected risk-free rate of return (as a percent) | 1.42% | ||
Vesting period | 4 years | ||
Stock-based compensation expense | $ 295 | $ 127 |
Equity - Option Activity (Detai
Equity - Option Activity (Details) - $ / shares | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Number of shares | ||||
Options outstanding, beginning (in shares) | 466,431 | 12,938 | 14,596 | |
Options canceled (in shares) | (12,938) | |||
Options granted (in shares) | 591,261 | |||
Options exercised (in shares) | (327,594) | (91,484) | ||
Options forfeited (in shares) | (33,346) | (1,658) | ||
Options outstanding, end (in shares) | 138,837 | 466,431 | 12,938 | 14,596 |
Exercisable (in shares) | 138,837 | 466,431 | 3,235 | |
Weighted average exercise price | ||||
Options outstanding, beginning (in dollars per share) | $ 2.87 | $ 135 | $ 135 | |
Options canceled (in dollars per shares) | 135 | |||
Options granted (in dollars per shares) | 2.87 | |||
Options exercised (in dollars per shares) | 2.87 | 2.87 | ||
Options forfeited (in dollars per shares) | 2.87 | 135 | ||
Options outstanding, end (in dollars per share) | 2.87 | 2.87 | 135 | $ 135 |
Exercisable (in dollars per share) | $ 2.87 | $ 2.87 | $ 135 | |
Weighted average remaining contractual life | ||||
Outstanding | 7 years 11 months 1 day | 6 years 9 months 15 days | 8 years 8 months 1 day | 9 years 7 months 28 days |
Exercisable | 7 years 11 months 1 day | 6 years 9 months 15 days | 8 years 8 months 1 day | |
Unvested options outstanding (in shares) | 0 |
Equity - Restricted stock (Deta
Equity - Restricted stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 7 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Other non-option information | ||||
Stock-based compensation expense | $ 3,861 | $ 3,701 | $ 127 | |
System rental | ||||
Other non-option information | ||||
Stock-based compensation expense | 6 | |||
System services | ||||
Other non-option information | ||||
Stock-based compensation expense | 191 | |||
Transloading services | ||||
Other non-option information | ||||
Stock-based compensation expense | $ 3 | |||
Restricted stock | ||||
Number of Shares | ||||
Unvested, beginning (in shares) | 648,676 | 1,218,265 | ||
Awarded (in shares) | 584,477 | 88,664 | ||
Vested (in shares) | (644,387) | |||
Forfeited (in shares) | (14,888) | (251,045) | ||
Unvested, end (in shares) | 1,218,265 | 411,497 | 1,218,265 | |
Weighted Average Grant Date Fair Value | ||||
Unvested, beginning (in dollars per share) | $ 12.04 | $ 12.61 | ||
Awarded (in dollars per share) | 13.25 | 16.92 | ||
Vested (in dollars per share) | 12.58 | |||
Forfeited (in dollars per share) | 12.87 | 12.49 | ||
Unvested, end (in dollars per share) | $ 12.61 | $ 13.67 | $ 12.61 | |
Other non-option information | ||||
Unrecognized compensation costs | $ 4,361 | |||
Expected period for recognizing compensation expense | 1 year 10 months 13 days | |||
Available for grant (in shares) | 3,595,738 | |||
Restricted stock | First vesting period | ||||
Other non-option information | ||||
Unrecognized compensation costs (in shares) | 213,636 | |||
Restricted stock | Second vesting period | ||||
Other non-option information | ||||
Unrecognized compensation costs (in shares) | 179,790 | |||
Restricted stock | Third vesting period | ||||
Other non-option information | ||||
Unrecognized compensation costs (in shares) | 18,071 | |||
Restricted stock | Salaries, benefits and payroll taxes | ||||
Other non-option information | ||||
Stock-based compensation expense | $ 3,661 | $ 3,406 | ||
Restricted stock | Property, Plant and Equipment | ||||
Other non-option information | ||||
Stock-based compensation expense | 1,040 | $ 1,080 | ||
Restricted stock | System rental | ||||
Other non-option information | ||||
Stock-based compensation expense | 6 | |||
Restricted stock | System services | ||||
Other non-option information | ||||
Stock-based compensation expense | 191 | |||
Restricted stock | Transloading services | ||||
Other non-option information | ||||
Stock-based compensation expense | $ 3 |
Equity - Receivable (Details)
Equity - Receivable (Details) - Notes receivable from unit-holders - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2018 | |
Notes receivable from unit-holders | ||
Receivable from unit-holders | $ 0 | $ 0 |
Proceeds from collection of notes receivable | 4,700 | |
Proceeds from collection of interest receivable | $ 575 | |
Previously assigned units | 46,875 | |
Solaris LLC | ||
Notes receivable from unit-holders | ||
Unit price (in dollars per unit) | $ 100 |
Equity - EPS (Details)
Equity - EPS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | May 16, 2017 | ||
Numerator | |||||||||||
Net income attributable to Solaris | $ 12,885 | $ 13,019 | $ 10,597 | $ 5,930 | $ 2,100 | $ 1,379 | $ 157 | $ 42,431 | $ 3,636 | ||
Less income attributable to participating securities | (1,230) | (248) | |||||||||
Net income attributable to common stockholders | $ 41,201 | $ 3,388 | |||||||||
Denominator | |||||||||||
Weighted average number of unrestricted outstanding common shares used to calculate basic net income per share (in shares) | 25,678 | 12,117 | |||||||||
Effect of dilutive securities: | |||||||||||
Stock options (in shares) | 151 | 365 | |||||||||
Diluted weighted-average shares of Class A common stock outstanding used to calculate diluted net income per share (in shares) | 25,829 | 12,482 | |||||||||
Earnings per share of Class A common stock - basic (in dollars per share) | $ 0.47 | $ 0.49 | $ 0.40 | $ 0.24 | $ 0.13 | $ 0.13 | $ 0.01 | $ 1.60 | $ 0.28 | ||
Earnings per share of Class A common stock - diluted (in dollars per share) | $ 0.47 | $ 0.49 | $ 0.40 | $ 0.23 | $ 0.13 | $ 0.12 | $ 0.01 | $ 1.59 | $ 0.27 | ||
Options exercised (in shares) | 327,594 | 91,484 | |||||||||
Class A Common Stock | |||||||||||
Earnings Per Share | |||||||||||
Common stock, shares outstanding | 27,000,000 | 19,010,000 | 27,000,000 | 19,010,000 | 0 | ||||||
Denominator | |||||||||||
Weighted average number of unrestricted outstanding common shares used to calculate basic net income per share (in shares) | [1] | 25,678,000 | 12,117,000 | ||||||||
Effect of dilutive securities: | |||||||||||
Diluted weighted-average shares of Class A common stock outstanding used to calculate diluted net income per share (in shares) | [1] | 25,829,000 | 12,482,000 | ||||||||
Earnings per share of Class A common stock - basic (in dollars per share) | [1] | $ 1.60 | $ 0.28 | ||||||||
Earnings per share of Class A common stock - diluted (in dollars per share) | [1] | $ 1.59 | $ 0.27 | ||||||||
Class B Common Stock | |||||||||||
Earnings Per Share | |||||||||||
Common stock, shares outstanding | 19,627,000 | 26,811,000 | 19,627,000 | 26,811,000 | 0 | ||||||
[1] | Represents earnings per share of Class A common stock and weighted-average shares of Class A common stock outstanding for the period following the May 17, 2017 Initial Public Offering. |
Equity - Antidilutive (Details)
Equity - Antidilutive (Details) - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Potentially dilutive shares | ||
Excluded from EPS calculation (in shares) | 21,139 | 31,325 |
Class B Common Stock | ||
Potentially dilutive shares | ||
Excluded from EPS calculation (in shares) | 20,727 | 31,100 |
Restricted stock | ||
Potentially dilutive shares | ||
Excluded from EPS calculation (in shares) | 412 | 225 |
Income Taxes (Details)
Income Taxes (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes | ||
U.S. federal corporate tax rate | 21.00% | 35.00% |
Income Taxes - Components of in
Income Taxes - Components of income tax expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current: | |||
State | $ 684 | $ 247 | $ 43 |
Total | 684 | 247 | 43 |
Deferred: | |||
Federal | 11,410 | 24,385 | |
State | 867 | 1,267 | |
Total | 12,277 | 25,652 | |
Income tax (benefit) expense | $ 12,961 | $ 25,899 | $ 43 |
Income Taxes - Income tax expen
Income Taxes - Income tax expense reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes | |||
Income before income taxes | $ 98,913 | $ 48,386 | $ 2,846 |
Less: net income prior to corporate reorganization | 3,665 | 2,846 | |
Less: net income before income taxes attributable to noncontrolling interest | 43,521 | 15,439 | |
Income attributable to Solaris Oilfield Infrastructure, Inc. stockholders before income taxes | 55,392 | 29,282 | |
Income tax expense (benefit) at the federal statutory rate | 11,632 | 10,249 | |
State income taxes, net of federal benefit | 1,373 | 1,071 | 43 |
Remeasurement of federal deferred tax assets due to rate change | 22,637 | ||
Tax Receivable Agreement adjustments | (8,058) | ||
Other | (44) | ||
Income tax (benefit) expense | $ 12,961 | $ 25,899 | $ 43 |
Effective tax rate | 13.10% | 53.50% | 1.50% |
Income Taxes - Deferred tax ass
Income Taxes - Deferred tax assets and liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Assets: | ||
Investments in subsidiaries | $ 20,219 | |
Imputed interest | $ 1,366 | 612 |
Net operating loss carryforward | 41,648 | 5,493 |
Total deferred tax assets | 43,014 | 26,324 |
Liabilities: | ||
Investments in subsidiaries | 17,575 | |
Total deferred tax liabilities | 17,575 | |
Net deferred tax asset | $ 25,439 | $ 26,324 |
Income Taxes - NOL (Details)
Income Taxes - NOL (Details) $ in Millions | Dec. 31, 2018USD ($) |
Federal | |
Operating loss | |
Operating loss carryovers | $ 185.8 |
Operating loss carryovers, no expiration date | 119.9 |
State | |
Operating loss | |
Operating loss carryovers | $ 49.2 |
Income Taxes - Uncertain Tax Be
Income Taxes - Uncertain Tax Benefits (Details) - USD ($) $ in Thousands | May 17, 2017 | Dec. 31, 2018 | Dec. 31, 2017 |
Uncertain Tax Benefits | |||
Balance, beginning | $ 812 | ||
Additions for the current year tax | $ 812 | ||
Additions related to prior years | 4 | ||
Balance, Ending | 816 | 812 | |
Payables related to Tax Receivable Agreement | 56,149 | 24,675 | |
Tax Receivable Agreement | |||
Uncertain Tax Benefits | |||
Payables related to Tax Receivable Agreement | $ 56,149 | $ 24,675 | |
Payments of net cash saving (as a percent) | 85.00% | 85.00% |
Concentrations (Details)
Concentrations (Details) | 12 Months Ended | ||
Dec. 31, 2018customeritem | Dec. 31, 2017customeritem | Dec. 31, 2016customeritem | |
Customer | Revenue | |||
Concentrations | |||
Number of customers | customer | 3 | 4 | 1 |
Concentration risk (as a percent) | 40.00% | ||
Customer | Revenue | Customer One | |||
Concentrations | |||
Concentration risk (as a percent) | 15.00% | 23.00% | |
Customer | Revenue | Customer Two | |||
Concentrations | |||
Concentration risk (as a percent) | 10.00% | 15.00% | |
Customer | Revenue | Customer Three | |||
Concentrations | |||
Concentration risk (as a percent) | 10.00% | 13.00% | |
Customer | Revenue | Customer Four | |||
Concentrations | |||
Concentration risk (as a percent) | 11.00% | ||
Customer | Accounts receivable | |||
Concentrations | |||
Number of customers | customer | 3 | 4 | |
Customer | Accounts receivable | Customer One | |||
Concentrations | |||
Concentration risk (as a percent) | 20.00% | 23.00% | |
Customer | Accounts receivable | Customer Two | |||
Concentrations | |||
Concentration risk (as a percent) | 10.00% | 20.00% | |
Customer | Accounts receivable | Customer Three | |||
Concentrations | |||
Concentration risk (as a percent) | 10.00% | 10.00% | |
Customer | Accounts receivable | Customer Four | |||
Concentrations | |||
Concentration risk (as a percent) | 10.00% | ||
Supplier | Purchases | |||
Concentrations | |||
Number of suppliers | item | 2 | 1 | |
Concentration risk (as a percent) | 0.00% | 17.00% | |
Supplier | Purchases | Supplier One | |||
Concentrations | |||
Concentration risk (as a percent) | 13.00% | ||
Supplier | Purchases | Supplier Two | |||
Concentrations | |||
Concentration risk (as a percent) | 11.00% | ||
Supplier | Accounts payables | |||
Concentrations | |||
Number of suppliers | item | 1 | 3 | |
Concentration risk (as a percent) | 13.00% | ||
Supplier | Accounts payables | Supplier One | |||
Concentrations | |||
Concentration risk (as a percent) | 17.00% | ||
Supplier | Accounts payables | Supplier Two | |||
Concentrations | |||
Concentration risk (as a percent) | 11.00% | ||
Supplier | Accounts payables | Supplier Three | |||
Concentrations | |||
Concentration risk (as a percent) | 10.00% |
Commitments and Contingencies_2
Commitments and Contingencies (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018USD ($) | Mar. 31, 2018USD ($)item | Dec. 31, 2018USD ($)item | Dec. 31, 2017USD ($) | Dec. 06, 2017USD ($) | |
Future minimum payments under non-cancelable operating leases: | |||||
2,019 | $ 1,432 | ||||
2,020 | 1,375 | ||||
2,021 | 1,299 | ||||
2,022 | 1,093 | ||||
2,023 | 1,092 | ||||
Thereafter | 9,725 | ||||
Total minimum lease payments | 16,016 | ||||
Raw material purchases | |||||
Other Commitments | |||||
Other commitments | 18,998 | $ 33,600 | |||
Solaris Energy Management, LLC | |||||
Future minimum payments under non-cancelable operating leases: | |||||
Total minimum lease payments | 7,662 | ||||
Other Commitments | |||||
Other commitments | 10,216 | ||||
Kingfisher Facility | |||||
Future minimum payments under non-cancelable operating leases: | |||||
Total minimum lease payments | $ 6,265 | ||||
Lease term | 30 years | ||||
Railtronix LLC | |||||
Other Commitments | |||||
Performance-based cash awards liability | $ 875 | $ 2,500 | |||
Number of completed milestones | item | 1 | 1 | |||
Contingent consideration payment | $ 1,625 | $ 1,625 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Related Party Transactions | |||
Due from related party | $ 232 | $ 58 | |
Due to related party | 103 | 6 | |
William A. Zartler | |||
Related Party Transactions | |||
Payment made to related party | $ 1,022 | $ 910 | $ 325 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended |
Jan. 31, 2019 | Dec. 31, 2017 | |
Subsequent Events | ||
Repayment of senior secured credit facility | $ 5,500 | |
Subsequent Event | Credit facility | ||
Subsequent Events | ||
Repayment of senior secured credit facility | $ 13,000 |
Selected Quarterly Financial _3
Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Selected Quarterly Financial Data (Unaudited) | |||||||||||
Revenue | $ 57,337 | $ 56,686 | $ 47,155 | $ 36,018 | $ 25,204 | $ 18,478 | $ 13,389 | $ 10,324 | $ 197,196 | $ 67,395 | $ 18,157 |
Operating income | 28,175 | 30,790 | 24,796 | 15,526 | 10,884 | 8,082 | 1,670 | 4,825 | 99,287 | 25,461 | 2,861 |
Net income | 24,652 | 26,437 | 21,448 | 13,415 | 9,237 | 7,406 | 1,062 | $ 4,782 | 85,952 | 22,487 | $ 2,803 |
Net income attributable to Solaris | $ 12,885 | $ 13,019 | $ 10,597 | $ 5,930 | $ 2,100 | $ 1,379 | $ 157 | $ 42,431 | $ 3,636 | ||
Earnings per share of Class A common stock - basic (in dollars per share) | $ 0.47 | $ 0.49 | $ 0.40 | $ 0.24 | $ 0.13 | $ 0.13 | $ 0.01 | $ 1.60 | $ 0.28 | ||
Earnings per share of Class A common stock - diluted (in dollars per share) | $ 0.47 | $ 0.49 | $ 0.40 | $ 0.23 | $ 0.13 | $ 0.12 | $ 0.01 | $ 1.59 | $ 0.27 |