Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 26, 2019 | |
Document Type | 10-Q/A | |
Document Period End Date | Mar. 31, 2019 | |
Entity Registrant Name | Solaris Oilfield Infrastructure, Inc. | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Central Index Key | 0001697500 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | true | |
Amendment Description | EXPLANATORY NOTEThis Amendment No. 1 on Form10-Q/A (this "Form 10-Q/A") amends and restates certain items noted below in the Quarterly Report on Form 10-Q of Solaris Oilfield Infrastructure, Inc. (the "Company") for the quarter ended March 31, 2019, as originally filed with the Securities and Exchange Commission on May 1, 2019 (the "Original Filing"). This Form 10-Q/A amends the Original Filing to reflect the correction of an error in the previously-reported unaudited condensed consolidated financial statements related to the Company's deferred tax asset, additional paid-in capital, non-controlling interest and retained earnings accounts. See Note 2 to the Condensed Consolidated Financial Statements included in Item 1 for additional information and a reconciliation of the previously reported amounts to the restated amounts. This adjustment is a non-cash adjustment and has no impact on the condensed consolidated statement of operations or the condensed consolidated statement of cash flows. For the convenience of the reader, this Form10-Q/A sets forth the Original Filing, as amended, in its entirety; however, this Form10-Q/A amends and restates only the following financial statements and disclosures that were impacted from the correction of the error: Part I, Item 1 – Financial Statements Part I, Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations Part I, Item 4 – Controls and Procedures Part II, Item 6 – Exhibits Signatures The Company's Chief Executive Officer and Chief Financial Officer have provided new certifications dated as of the date of this filing in connection with this Form 10-Q/A (Exhibits 31.1, 31.2, 32.1 and 32.2), and the Company has provided its revised consolidated financial statements formatted in Extensible Business Reporting Language (XBRL) in Exhibit 101. Except as described above, no other changes have been made to the Original Filing. This Form10-Q/A speaks as of the date of the Original Filing and does not reflect events that may have occurred after the date of the Original Filing or modify or update any disclosures that may have been affected by subsequent events. The Company is also concurrently filing an amended Annual Report on Form 10-K/A for the year ended December 31, 2018 to restate the previously issued annual consolidated financial statements due to the accounting error described above. | |
Class A Common Stock | ||
Entity Common Stock, Shares Outstanding | 31,256,653 | |
Class B Common Stock | ||
Entity Common Stock, Shares Outstanding | 16,331,037 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 9,351 | $ 25,057 |
Accounts receivable, net | 40,330 | 39,746 |
Prepaid expenses and other current assets | 4,358 | 5,492 |
Inventories | 10,399 | 10,470 |
Total current assets | 64,438 | 80,765 |
Property, plant and equipment, net | 310,504 | 296,538 |
Operating lease right-of-use assets | 8,348 | |
Goodwill | 17,236 | 17,236 |
Intangible assets, net | 4,345 | 4,540 |
Deferred tax assets | 62,684 | 58,074 |
Other assets | 1,424 | 1,454 |
Total assets | 468,979 | 458,607 |
Current liabilities: | ||
Accounts payable | 2,400 | 9,127 |
Accrued liabilities | 9,969 | 12,658 |
Current portion of deferred revenue | 12,990 | 12,990 |
Current portion of operating lease liabilities | 565 | |
Current portion of finance lease liabilities | 35 | 35 |
Other current liabilities | 77 | 515 |
Total current liabilities | 26,036 | 35,325 |
Senior secured credit facility | 13,000 | |
Deferred revenue, net of current | 9,333 | 12,468 |
Operating lease liabilities, net of current | 8,352 | |
Finance lease liabilities, net of current | 149 | 154 |
Payables related to Tax Receivable Agreement | 66,648 | 56,149 |
Other long-term liabilities | 598 | 633 |
Total liabilities | 111,116 | 117,729 |
Commitments and contingencies (Note 11) | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value, 50,000 shares authorized, none issued and outstanding | ||
Additional paid-in capital | 188,458 | 164,086 |
Retained earnings | 44,173 | 35,507 |
Treasury stock (at cost), 119 shares and 91 shares as of March 31, 2019 and December 31, 2018, respectively | (1,845) | (1,414) |
Total stockholders' equity attributable to Solaris | 231,090 | 198,450 |
Non-controlling interest | 126,773 | 142,428 |
Total stockholders' equity | 357,863 | 340,878 |
Total liabilities and stockholders' equity | 468,979 | 458,607 |
Class A Common Stock | ||
Stockholders' equity: | ||
Common stock | $ 304 | $ 271 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, Authorized shares | 50,000 | 50,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Treasury stock (in shares) | 119 | 91 |
Class A Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 600,000 | 600,000 |
Common stock, shares issued | 30,401 | 27,091 |
Common stock, shares outstanding | 30,282 | 27,000 |
Class B Common Stock | ||
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized | 180,000 | 180,000 |
Common stock, shares issued | 16,382 | 19,627 |
Common stock, shares outstanding | 16,381 | 19,627 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | ||
Revenue: | |||
Revenue | $ 55,124 | $ 36,018 | |
Operating costs and expenses: | |||
Depreciation and amortization | 6,345 | 3,202 | |
Salaries, benefits and payroll taxes | [1] | 2,342 | 2,621 |
Selling, general and administrative (excluding $119 and $113 of depreciation and amortization for the three months ended March 31, 2019 and 2018, respectively, shown separately) | 1,686 | 1,880 | |
Other operating expenses | 213 | 1,677 | |
Total operating costs and expenses | 27,397 | 20,492 | |
Operating income | 27,727 | 15,526 | |
Interest expense, net | (111) | (84) | |
Total other income (expense) | (111) | (84) | |
Income before income tax expense | 27,616 | 15,442 | |
Provision for income taxes | (4,181) | (2,027) | |
Net income | 23,435 | 13,415 | |
Less: net income related to non-controlling interests | (11,118) | (7,485) | |
Net income attributable to Solaris | 12,317 | 5,930 | |
System rental | |||
Revenue: | |||
Revenue | 37,348 | 27,405 | |
Operating costs and expenses: | |||
Cost of revenue | 2,347 | 1,418 | |
Depreciation and amortization | 5,226 | 2,635 | |
System services | |||
Revenue: | |||
Revenue | 11,437 | 7,509 | |
Operating costs and expenses: | |||
Cost of revenue | 13,619 | 9,106 | |
Depreciation and amortization | 398 | 237 | |
Transloading services | |||
Revenue: | |||
Revenue | 5,833 | 450 | |
Operating costs and expenses: | |||
Cost of revenue | 710 | 332 | |
Depreciation and amortization | 409 | 5 | |
Inventory software services | |||
Revenue: | |||
Revenue | 506 | 654 | |
Operating costs and expenses: | |||
Cost of revenue | 135 | 256 | |
Depreciation and amortization | $ 193 | $ 212 | |
Class A Common Stock | |||
Operating costs and expenses: | |||
Earnings per share of Class A common stock - basic (in dollars per share) | $ 0.43 | $ 0.24 | |
Earnings per share of Class A common stock - diluted (in dollars per share) | $ 0.43 | $ 0.23 | |
Basic weighted-average shares of Class A common stock outstanding (in shares) | 28,028 | 23,884 | |
Diluted weighted-average shares of Class A common stock outstanding (in shares) | 28,115 | 24,073 | |
[1] | The condensed consolidated statements of operations include stock-based compensation expense as follows:Cost of system rental$ 4$ 5Cost of system services 64 40Cost of transloading services 3 —Salaries, benefits and payroll taxes 791 1,468Stock-based compensation expense$ 862$ 1,513 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Depreciation and amortization | $ 6,345 | $ 3,202 |
Stock-based compensation expense | 862 | 1,513 |
Selling, general and administrative expenses | ||
Depreciation and amortization | 119 | 113 |
Salaries, benefits and payroll taxes | ||
Stock-based compensation expense | 791 | 1,468 |
System rental | ||
Depreciation and amortization | 5,226 | 2,635 |
Stock-based compensation expense | 4 | 5 |
System services | ||
Depreciation and amortization | 398 | 237 |
Stock-based compensation expense | 64 | 40 |
Transloading services | ||
Depreciation and amortization | 409 | 5 |
Stock-based compensation expense | 3 | |
Inventory software services | ||
Depreciation and amortization | $ 193 | $ 212 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ AND MEMBERS’ EQUITY - USD ($) shares in Thousands, $ in Thousands | Common StockClass A Common Stock | Common StockClass B Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Non controlling Interest | Total |
Balance at beginning of year at Dec. 31, 2017 | $ 190 | $ 117,638 | $ (4,174) | $ (261) | $ 140,850 | $ 254,243 | |
Balance at beginning of year (in shares) at Dec. 31, 2017 | 19,010 | 26,811 | 16 | ||||
Changes in Stockholders' Equity | |||||||
Exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock | $ 59 | 31,317 | (31,376) | ||||
Exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock (in shares) | 5,904 | (5,904) | |||||
Deferred tax asset and payables related 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 | (171) | (171) | |||||
Stock option exercises | $ 3 | 1,047 | (374) | 676 | |||
Stock option exercises (in shares) | 235 | ||||||
Stock-based compensation | 989 | 885 | 1,874 | ||||
Net income | 5,930 | 7,485 | 13,415 | ||||
Balance at end of year at Mar. 31, 2018 | $ 252 | 150,820 | 1,756 | $ (261) | 117,470 | 270,037 | |
Balance at end of year (in shares) at Mar. 31, 2018 | 25,149 | 20,907 | 16 | ||||
Changes in Stockholders' Equity | |||||||
Effect of ASU No. 2016-02 implementation | 186 | (532) | (186) | (532) | |||
Balance at beginning of year at Dec. 31, 2018 | $ 271 | 164,086 | 35,507 | $ (1,414) | 142,428 | 340,878 | |
Balance at beginning of year (in shares) at Dec. 31, 2018 | 27,091 | 19,627 | 91 | ||||
Changes in Stockholders' Equity | |||||||
Exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock | $ 32 | 24,925 | (24,957) | ||||
Exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock (in shares) | 3,245 | (3,245) | |||||
Deferred tax asset and payables related to Tax Receivable Agreement from the exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock | (1,895) | (1,895) | |||||
Stock option exercises | $ 1 | 601 | $ (427) | (336) | (161) | ||
Stock option exercises (in shares) | 65 | 28 | |||||
Stock-based compensation | 553 | 346 | 899 | ||||
Payments related to purchase of treasury stock | 2 | $ (4) | (2) | (4) | |||
Solaris LLC distribution paid to Solaris LLC unitholders at $0.10 per Solaris LLC Unit | (1,638) | (1,638) | |||||
Dividends paid ($0.10 per share of Class A common stock) | (3,119) | (3,119) | |||||
Net income | 12,317 | 11,118 | 23,435 | ||||
Balance at end of year at Mar. 31, 2019 | $ 304 | $ 188,458 | $ 44,173 | $ (1,845) | $ 126,773 | $ 357,863 | |
Balance at end of year (in shares) at Mar. 31, 2019 | 30,401 | 16,382 | 119 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ AND MEMBERS’ EQUITY (Parenthetical) - $ / shares | Mar. 29, 2019 | Mar. 31, 2019 |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ AND MEMBERS’ EQUITY | ||
Distributions paid to unit holders (in dollars per unit) | $ 0.10 | |
Cash dividends paid (in dollars per share) | $ 0.10 | $ 0.1 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 23,435 | $ 13,415 |
Adjustment to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 6,345 | 3,202 |
Loss on disposal of asset | 213 | 3 |
Stock-based compensation | 862 | 1,513 |
Amortization of debt issuance costs | 79 | 63 |
Deferred income tax expense | 3,992 | 1,906 |
Other | 2 | (9) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (584) | (7,087) |
Prepaid expenses and other assets | 1,131 | (2,569) |
Inventories | (3,545) | (7,124) |
Accounts payable | (5,027) | 510 |
Accrued liabilities | (759) | 620 |
Deferred revenue | (3,134) | |
Net cash provided by operating activities | 23,010 | 4,443 |
Cash flows from investing activities: | ||
Investment in property, plant and equipment | (20,370) | (41,160) |
Investment in intangible assets | (6) | |
Cash received from insurance proceeds | 24 | |
Net cash used in investing activities | (20,346) | (41,166) |
Cash flows from financing activities: | ||
Payments under finance leases | (9) | (7) |
Payments under insurance premium financing | (439) | |
Proceeds from stock option exercises | 266 | 676 |
Payments related to purchase of treasury stock | (431) | |
Repayment of senior secured credit facility | (13,000) | |
Payments related to debt issuance costs | (954) | |
Distribution and dividend paid to Solaris LLC unitholders and Class A common shareholders | (4,757) | |
Net cash used in financing activities | (18,370) | (285) |
Net decrease in cash | (15,706) | (37,008) |
Cash at beginning of period | 25,057 | 63,421 |
Cash at end of period | 9,351 | 26,413 |
Non-cash activities | ||
Capitalized depreciation in property, plant and equipment | 186 | 140 |
Property and equipment additions incurred but not paid at period-end | 240 | 6,267 |
Cash paid for: | ||
Interest | $ 119 | $ 11 |
Organization and Background of
Organization and Background of Business | 3 Months Ended |
Mar. 31, 2019 | |
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, Eagle Ford Shale, SCOOP/STACK formations, Haynesville Shale, Rockies, Marcellus and Utica Shales and Bakken formation. 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 at the Kingfisher Facility 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 use data from our software solutions 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 | 3 Months Ended |
Mar. 31, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying interim unaudited condensed consolidated financial statements of Solaris 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. Operating results for the three months ended March 31, 2019 and 2018 are not necessarily indicative of the results that may be expected for the full year or for any interim period. The unaudited interim condensed consolidated financial statements should be read in conjunction with Solaris Inc.’s Annual Report on Form 10-K/A for the year ended December 31, 2018. 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. All material intercompany transactions and balances have been eliminated upon consolidation. Restatement of Previously Reported Financial Statements Subsequent to filing the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, the Company determined there was an error affecting the deferred tax asset, additional paid-in capital, non-controlling interest and retained earnings accounts reported in the Company’s Annual Reports on Forms 10-K for the periods ended December 31, 2017 and 2018, and in the Company’s Quarterly Reports on Forms 10-Q during 2018 and for the period ended March 31, 2019 (together, the “Restated Periods”). The error also affected the provision for income taxes in the year ended December 31, 2017. The error had no impact on the calculations of EBITDA or Adjusted EBITDA, or on cash or total cash from operations for any of the Restated Periods. The errors were primarily related to accounting for the balance sheet impact of the Company’s November Offering in the fourth quarter of 2017 and subsequent exchanges of membership interests in Solaris LLC (together with a corresponding number of shares of Class B common stock) for shares of Class A common stock in the Company and contributions of Class A shares in connection with stock based compensation. The restatement had no impact on the unaudited condensed consolidated statement of operations or unaudited condensed consolidated statements of cash flows for the quarters ending March 31, 2019 and 2018. The table below sets forth the unaudited condensed consolidated balance sheet, including the balances originally reported, corrections and the as adjusted balances for the restated period ending March 31, 2019: March 31, 2019 As Reported Adjustments Adjusted Deferred tax assets $ 25,258 $ 37,426 $ 62,684 Total assets 431,553 37,426 468,979 Additional paid-in capital 131,740 56,718 188,458 Retained Earnings 51,983 (7,810) 44,173 Total stockholders' equity attributable to Solaris 182,182 48,908 231,090 Non-controlling interest 138,255 (11,482) 126,773 Total stockholders' equity 320,437 37,426 357,863 Total liabilities and stockholders' equity 431,553 37,426 468,979 The table below sets forth the unaudited condensed consolidated statement of changes in stockholders’ equity, including the balances originally reported, corrections and the as adjusted balances for the restated period ending March 31, 2019: Additional Non- Total Paid-In Retained Controlling Stockholders' (In thousands) Capital Earnings Interest Equity Balance at March 31, 2019, as reported $ 131,740 $ 51,983 $ 138,255 $ 320,437 Correction 56,718 (7,810) (11,482) 37,426 Balance at March 31, 2019, as adjusted 188,458 44,173 126,773 357,863 Use of Estimates The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates used in the preparation of these condensed consolidated financial statements include, but are not limited to, 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, determination of the present value of lease payments and right-of-use assets 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 March 31, 2019 and December 31, 2018. 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 condensed consolidated statements of operations. There were no impairments recorded for the three months ended March 31, 2019 and 2018. 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 are considered property, plant and equipment. However, the systems do not depreciate until they are fully completed. Systems 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 condensed consolidated financial statements and any resulting gain or loss is recognized in the condensed 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 well as patents that were filed for our systems and other intellectual property. Amortization on these assets is calculated on the straight-line method over the estimated useful lives of the assets, which is five to fifteen years based on estimates the Company believes are reasonable. The Company recorded amortization expense of $195 and $216 for the three months ended March 31, 2019 and 2018, respectively. Identified intangible assets by major classification consist of the following: Accumulated Net Book Gross Amortization Value As of March 31, 2019: Customer relationships $ 4,703 $ (896) $ 3,807 Software acquired in the acquisition of Railtronix 346 (66) 280 Non-competition agreement 225 (60) 165 Patents and other 114 (21) 93 Total identifiable intangibles $ 5,388 $ (1,043) $ 4,345 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 Leases The Company accounts for leases in accordance with Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC Topic 842”), which the Company adopted under ASU No. 2016-02 “Leases (Topic 842)” effective January 1, 2019. The Company applied ASC Topic 842 to all leases existing at or commencing after January 1, 2019 and elected the package of transition practical expedients for expired or existing contracts, which does not require reassessment of: (1) whether any of our contracts are or contain leases, (2) lease classification and (3) initial direct costs. The Company also elected the practical expedient to adopt the new lease requirements through a cumulative effect adjustment in the period of adoption and did not adjust comparative periods. As a result of the adoption of ASC Topic 842 on January 1, 2019, the Company recorded operating ROU assets of $8,503, operating lease liabilities of $9,016 and a cumulative effect adjustment to retained earnings for operating leases of $532. We determine if an arrangement is a lease at inception. The Company made the election to not apply the recognition requirements in ASC Topic 842 to short-term leases (i.e., leases of twelve months or less). Instead, the Company recognizes the lease payments in profit or loss on a straight-line basis over the lease term. Operating leases are included in operating lease ROU assets, current portion of operating lease liabilities, and operating lease liabilities, net of current in the Company’s condensed consolidated balance sheets. Finance leases are included in property and equipment, current portion of finance lease liabilities, and finance lease liabilities, net of current in the Company’s condensed consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, we use our incremental borrowing rate in determining the present value of lease payments based on the information available at the commencement date. Our incremental borrowing rate reflects the estimated rate of interest that we would pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. We use the implicit rate when readily determinable. The ROU asset also includes any lease payments made and excludes lease incentives received. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. 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 March 31, 2019 and December 31, 2018, 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. 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 three months ended March 31, 2019 and 2018. 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 indicators for the three months ended March 31, 2019 and 2018. Revenue Recognition 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 and chemicals at oil and natural gas well sites, which is considered to be our performance obligation. 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 proppant delivered and transloaded at the facility. Under 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. The Company recorded $474 of shortfall revenue during the three months ended March 31, 2019. 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. 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 fee received in December 2018 in accordance with a contract modification which is accounted for prospectively. The partial termination payment fee 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. Deferred revenues in the condensed consolidated balance sheets were $22,323 and $25,458 as of March 31, 2019 and December 31, 2018, respectively, which will be recognized as Revenue from transloading services over the remaining two-year term of the modified agreement. The Company recognized $3,134 of deferred revenue as Revenue from transloading services in the condensed consolidated statements of operations for the three months ended March 31, 2019. No deferred revenue was recorded or recognized as revenue during the three months ended March 31, 2018. 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 condensed consolidated statements of operations based on their fair values on the date of grant. The Company recognizes expense on a straight-line basis over the awards’ vesting period, which is generally the requisite service period. Research and Development The Company expenses research and development costs as incurred, which is included in selling, general and administrative expenses in the condensed consolidated statements of operations. There were no research and development costs for the three months ended March 31, 2019 and 2018. 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 March 31, 2019, we had no 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 three months ended March 31, 2019 and 2018, we recognized a combined United States federal and state provision for income taxes of $4,181 and $2,027, respectively. Solaris LLC is treated as a partnership for United States federal income tax purposes and therefore does not pay United States federal income tax on its taxable income. Instead, the Solaris LLC members are liable for United States federal income tax on their respective shares of the Company’s taxable income reported on the members’ United States 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 March 31, 2019 and December 31, 2018. 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 condensed 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 condensed 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 9. “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 and 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 IPO or pursuant to the exercise of the Redemption Right or the Call Right (each as defined in Solaris LLC’s Second Amended and Restated Limited Liability Company Agreement (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 March 31, 2019 and December 31, 2018, Solaris Inc. recorded a payable related to the Tax Receivable Agreement of $66,648 and $56,149, 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 March 31, 2019 and December 31, 2018, 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 Issued But Not Yet Adopted In August 2018, the Financial Accounting Standards Board (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”), which 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 condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which replaces the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 requires the use of a forward-looking expected credit loss model for accounts receivables, loans and other financial instruments. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. Adoption of ASU 2016-13 will be applied using a modified-retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. We are currently in the process of evaluating the impact, if any, that ASU 2016-13 will have on our condensed consolidated financial statements. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 3 Months Ended |
Mar. 31, 2019 | |
Prepaid Expenses and Other Current Assets. | |
Prepaid Expenses and Other Current Assets | 3. Prepaid Expenses and Other Current Assets Prepaid expenses and other currents assets were comprised of the following at March 31, 2019 and December 31, 2018: March 31, December 31, 2019 2018 Prepaid purchase orders $ 1,975 $ 2,802 Prepaid insurance 166 576 Deposits 1,178 882 Other assets 1,039 1,232 Prepaid expenses and other current assets $ 4,358 $ 5,492 |
Property, Plant and Equipment
Property, Plant and Equipment | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment. | |
Property, Plant and Equipment | 4. Property, Plant and Equipment Property, plant and equipment was comprised of the following at March 31, 2019 and December 31, 2018: March 31, December 31, 2019 2018 Systems and related equipment $ 264,729 $ 254,795 Systems in process 20,930 11,245 Transloading facility and equipment 40,249 40,218 Computer and related equipment 5,511 4,990 Machinery and equipment 5,136 5,126 Vehicles 8,322 8,334 Buildings 4,314 4,280 Land 612 612 Furniture and fixtures 284 282 Property, plant and equipment, gross 350,087 329,882 Less: accumulated depreciation (39,583) (33,344) Property, plant and equipment, net $ 310,504 $ 296,538 Depreciation expense for the three months ended March 31, 2019 and 2018 was $6,150 and $2,986, respectively, of which $5,226 and $2,635 is attributable to cost of system rental, $398 and $237 is attributable to cost of system services, $409 and $5 is attributable to cost of transloading services and $117 and $109 is attributable to selling, general and administrative expenses, respectively. The Company capitalized $186 and $140 of depreciation expense associated with machinery and equipment used in the manufacturing of its systems for the three months ended March 31, 2019 and 2018, respectively. |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Mar. 31, 2019 | |
Accrued Liabilities | |
Accrued Liabilities | 5. Accrued Liabilities Accrued liabilities were comprised of the following at March 31, 2019 and December 31, 2018: March 31, December 31, 2019 2018 Property, plant and equipment $ 184 $ 2,153 Employee related expenses 2,626 4,500 Selling, general and administrative 1,200 944 Cost of revenue 3,799 2,702 Excise, franchise and sales taxes 1,643 1,461 Ad valorem taxes 441 774 Other 76 124 Accrued liabilities $ 9,969 $ 12,658 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases | |
Leases | 6. Leases The Company leases land and equipment under operating leases which expire at various dates through February 2047. These land leases include commitments related to a 30-year land lease with the State of Oklahoma related to the Company’s Kingfisher Facility. Equipment leases include locomotives rented from third-parties in order to facilitate rail transloading activities at the Kingfisher Facility. Upon completion of the primary term, both parties have substantive rights to terminate the leases. As a result, enforceable rights and obligations do not exist under the rental agreements subsequent to the primary term. Additionally, the Company leases office and storage from third parties for our corporate and field locations under operating leases, which include 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. Refer to Note 12. “Related Party Transactions” for additional information regarding related party transactions recognized. Upon completion of the primary term, both parties have substantive rights to terminate the leases. As a result, enforceable rights and obligations do not exist under the rental agreements subsequent to the primary term. Solaris LLC leases property from the City of Early, Texas under an agreement classified as a finance lease. The lease expires on February 25, 2025. The finance lease obligation is payable in monthly installments including imputed interest. The Company also leases certain office equipment with purchase options upon the end of lease terms which are accounted for as finance leases with various expiration dates. As of March 31, 2019 and December 31, 2018, the Company had property, plant and equipment under finance leases with a cost of $299 and accumulated depreciation of $90 and $85, respectively. The Company’s lease agreements do not include both lease and non-lease components, extension options or residual value guarantees, and there are no leases that have yet to commence. Additionally, our lease agreements do not impose restrictions on our ability to pay dividends or incur financing obligations. The components of lease expense were as follows: Three Months Ended March 31, 2019 Operating lease cost (1) (2) $ 297 Finance lease cost Amortization of ROU assets 8 Interest on lease liabilities 1 Total finance lease cost $ 9 (1) Includes short term leases. (2) Operating lease costs of $20, $92 and $185 were reported in Selling, general and administrative, Cost of system services and Cost of transloading services, respectively. No variable lease costs were recognized during the three months ended March 31. Future minimum lease payments under non-cancellable operating leases as of December 31, 2018 were 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 Future minimum lease payments under non-cancellable leases as of March 31, 2019 were as follows: Year Ending December 31, Operating Leases Finance Leases 2019 (remainder of) $ 879 $ 31 2020 1,116 35 2021 1,060 33 2022 1,091 33 2023 1,100 33 Thereafter 9,463 40 Total future minimum lease payments 14,709 205 Less: effects of discounting (5,792) (21) Total lease liabilities $ 8,917 $ 184 Other information related to leases was as follows: Three Months Ended March 31, 2019 Supplemental Cash Flows Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 241 Financing cash flows from finance leases 9 Weighted Average Remaining Lease Term Operating leases 14.3 years Finance leases 5.8 years Weighted Average Discount Rate Operating leases Finance leases |
Senior Secured Credit Facility
Senior Secured Credit Facility | 3 Months Ended |
Mar. 31, 2019 | |
Senior Secured Credit Facility | |
Senior Secured Credit Facility | 7. Senior Secured Credit Facility On January 19, 2018, we entered into a 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 “2018 Credit Agreement 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 2018 Credit Agreement Administrative Agent. The 2018 Credit Agreement consisted 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 had any obligation to increase its own revolving credit commitment. The Advance Loan amortized beginning in April 2019 and each of the Loans matured on January 19, 2022. Our obligations under the Loans were generally secured by a pledge of substantially all of the assets of the Company and its subsidiaries, and such obligations were guaranteed by our domestic subsidiaries other than Immaterial Subsidiaries (as defined in the 2018 Credit Agreement). We had the option to prepay the loans at any time without penalty. The 2018 Credit Agreement permitted 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 were 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 could not exceed 35% of the entire borrowing base. Borrowings under the Advance Loan were 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 was then subject to the liens securing the Loans. As of December 31, 2018 we had $13,000 of borrowings outstanding under the 2018 Credit Agreement. During the three months ended March 31, 2019, all outstanding borrowings were repaid and as of March 31, 2019, we had no borrowings under the 2018 Credit Agreement outstanding. Borrowings under the 2018 Credit Agreement bore interest at one-month LIBOR plus an applicable margin and interest were payable monthly. The applicable margin ranged from 3.00% to 3.50% depending on our senior leverage ratio. Borrowings under the Revolving Loan had a weighted average interest rate of 5.49%, for the three months ended March 31, 2019. The 2018 Credit Agreement required 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 required 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 was subtracted from indebtedness and senior indebtedness, respectively, an amount equal to the lesser of $10,000 or 50% of unrestricted cash and cash equivalents of the Company and its subsidiaries. EBITDA, as defined in the 2018 Credit Agreement, excluded certain noncash items and any extraordinary, unusual or non-recurring gains, losses or expenses. The 2018 Credit Agreement also required that we maintain a ratio of consolidated EBITDA to fixed charges of not less than 1.25 to 1.00. Capital expenditures were permitted up to $75,000 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 were 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 March 31, 2019, we were in compliance will all covenants in accordance with the 2018 Credit Agreement. On April 26, 2019, we entered into an Amended and Restated Credit Agreement (the “2019 Credit Agreement”) by and among the Company, as borrower, each of the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent. The 2019 Credit Agreement replaced, in its entirety, the Company’s 2018 Credit Agreement. The 2019 Credit Agreement increases the revolving loan to $50.0 million, with availability based on a total leverage covenant of 2.5x total debt to EBITDA. The 2019 Credit Agreement includes a $25.0 million uncommitted accordion option to increase the total revolving loan to $75.0 million. As of April 30, 2019, the Company has $50.0 million of availability under its undrawn credit facility. |
Equity
Equity | 3 Months Ended |
Mar. 31, 2019 | |
Equity | |
Equity | 8. Equity Dividends On March 29, 2019, the Company paid a quarterly cash dividend of $0.10 per share of Class A common stock. Solaris LLC paid a distribution of $4,757, or $0.10 per Solaris LLC Unit, to all Solaris LLC unitholders as of March 22, 2019, $3,119 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 March 22, 2019, which totaled $3,119, including $79 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. As of March 31, 2019, 511,656 options have been exercised, 33,346 forfeited and 46,259 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. 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 three months ended March 31, 2019 and 2018, the Company did not recognize stock-based compensation expense on options. The Company accounts for its stock-based compensation including grants of restricted stock in the condensed 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 three months ended March 31, 2019 and 2018: Restricted Stock Awards 2019 2018 Unvested at January 1, 411,497 1,218,265 Awarded 375,068 2,120 Vested (706) — Forfeited (405) (848) Unvested at March 31, 785,454 1,219,537 For the three months ended March 31, 2019, the Company recognized $4, $64, $3 and $791 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, respectively, in the condensed consolidated statements of operations and $37 within property, plant and equipment, net in the condensed consolidated balance sheets. For the three months ended March 31, 2018, the Company recognized $5, $40 and $1,468 of stock-based compensation expense on restricted stock in cost of system rental, cost of system services and salaries, benefits and payroll taxes, respectively, in the condensed consolidated statements of operations and $361 within property, plant and equipment, net in the condensed consolidated balance sheets. Compensation expense includes adjustment for forfeitures as incurred. As of March 31, 2019, 785,454 shares of restricted stock are issued and are outstanding. 213,501 shares, 304,680 shares, 142,252 shares and 125,021 shares of restricted stock vest in 2019, 2020, 2021 and 2022, respectively. Earnings Per Share Basic earnings per share of Class A common stock is computed by dividing net income attributable to Solaris by the weighted-average number of shares of Class A common stock outstanding during the same period. Diluted earnings per share is computed giving effect to all potentially dilutive shares. The following table sets forth the calculation of earnings per share, or EPS, for the three months ended March 31, 2019 and 2018: Three Months Ended March 31, Basic net income per share: 2019 2018 Numerator Net income attributable to Solaris $ 12,317 $ 5,930 Less income attributable to participating securities (1) (253) (288) Net income attributable to common stockholders $ 12,064 $ 5,642 Denominator Weighted average number of unrestricted outstanding common shares used to calculate basic net income per share 28,028 23,884 Effect of dilutive securities: Stock options (2) 87 189 Diluted weighted-average shares of Class A common stock outstanding used to calculate diluted net income per share 28,115 24,073 Earnings per share of Class A common stock - basic $ 0.43 $ 0.24 Earnings per share of Class A common stock - diluted $ 0.43 $ 0.23 (1) The Company’s restricted shares of common stock are participating securities. (2) The three months ended March 31, 2019 and 2018 include 87 shares and 189 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: Three Months Ended March 31, 2019 2018 Class B common stock 18,711 22,172 Restricted stock awards 117 635 Total 18,828 22,807 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Taxes | |
Income Taxes | 9. 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. The effective combined United States federal and state income tax rates were 15.21% and 12.97% for the three months ended March 31, 2019 and 2018, respectively. For the three months ended March 31, 2019 and 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. 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 in to the valuation allowance and an increase in the effective tax rate. 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 March 31, 2019 and December 31, 2018, the Company’s uncertain tax benefits totaling $816 are reported as a component of the net deferred tax asset in the condensed consolidated balance sheets. The full balance of unrecognized tax benefits as of March 31, 2019, 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 March 31, 2019, the Company has not accrued any penalties or interest. Payables Related to the Tax Receivable Agreement As of March 31, 2019, our liability under the Tax Receivable Agreement was $66,648, representing 85% of the calculated net cash savings in United States federal, state and local income tax and 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 IPO 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 IPO 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 condensed consolidated statement of operations. |
Concentrations
Concentrations | 3 Months Ended |
Mar. 31, 2019 | |
Concentrations | |
Concentrations | 10. Concentrations For the three months ended March 31, 2019, four customers accounted for 15%, 13%, 12% and 11% of the Company’s revenue. For the three months ended March 31, 2018, four customers accounted for 18%, 12%, 11%, and 10% of the Company’s revenue. As of March 31, 2019, three customers accounted for 21%, 15% and 11% of the Company’s accounts receivable. As of December 31, 2018, three customers accounted for 20%, 10% and 10% of the Company’s accounts receivable. For the three months ended March 31, 2019, one supplier accounted for 14% of the Company’s total purchases. For the three months ended March 31, 2018, one supplier accounted for 10% of the Company’s total purchases. As of March 31, 2019, one supplier accounted for 13% of the Company’s accounts payable. As of December 31, 2018, one supplier accounted for 13% of the Company’s accounts payable. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | 11. Commitments and Contingencies In the normal course of business, the Company is subjected to various claims, legal actions, contract negotiations and disputes. The Company provides for losses, if any, in the year in which they can be reasonably estimated. In management’s opinion, there are currently no such matters outstanding that would have a material effect on the accompanying condensed consolidated financial statements. The table below provides estimates of the timing of future payments that we are contractually obligated to make based on agreements in place at March 31, 2019: For the Year Ending December 31, 2019 2020 2021 2022 2023 Thereafter Total (in thousands) Operating lease obligations (1) $ 879 $ 1,116 $ 1,060 $ 1,091 $ 1,100 $ 9,463 $ 14,709 Finance lease obligations (2) 31 35 33 33 33 40 205 Commitment fees on Revolving Loan (3) 75 100 100 5 — — 280 Purchase commitments (4) 9,685 — — — — — 9,685 Other commitments 195 259 239 25 — — 718 Total $ 10,865 $ 1,510 $ 1,432 $ 1,154 $ 1,133 $ 9,503 25,597 (1) (2) (3) (4) 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 March 31, 2019 and December 31, 2018, the Company had commitments of approximately $9,685 and $18,998, 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 March 31, 2019, one milestone had been achieved and the Company paid and recognized $1,625 in March 2018 in other operating expense in the condensed consolidated statements of operations. However, as of March 31, 2019, the Company had not concluded that the remaining milestone will be achieved and thus has not recognized additional obligations in the condensed consolidated financial statements. The Company has executed a guarantee of lease agreement with Solaris Energy Management, LLC, a related party of the Company, related to the rental of office space for the Company’s corporate headquarters. The total future guaranty under the guarantee of lease agreement with Solaris Energy Management, LLC is $9,971 as of March 31, 2019. Refer to Note 12. “Related Party Transactions” for additional information regarding related party transactions recognized and Note 6. “Leases” for operating lease discussion. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions | |
Related Party Transactions | 12. 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 three months ended March 31, 2019 and 2018, Solaris LLC paid $278 and $214, respectively, for these services. As of March 31, 2019 and December 31, 2018, the Company included $238 and $232, respectively, in prepaid expenses and other current assets on the condensed consolidated balance sheets. As of March 31, 2019 and December 31, 2018, the Company included $103 of accruals to related parties in accrued liabilities on the condensed consolidated balance sheets. These costs are primarily incurred in connection with the administrative services agreement, dated November 22, 2016, between Solaris LLC and Solaris Energy Management, LLC, a company partially owned by William A. Zartler. 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 9. “Income Taxes” for further discussion of the impact of the Tax Receivable Agreement on Solaris Inc. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events | |
Subsequent Events | 13. Subsequent Events The Company has evaluated events and transactions subsequent to the balance sheet date and through April 30, 2019, the date the financial statements were available to be issued. 2019 Credit Agreement On April 26, 2019, we entered into the 2019 Credit Agreement by and among the Company, as borrower, each of the lenders party thereto and Wells Fargo Bank, as administrative agent. Refer to Note 7. “Senior Secured Credit Facility.” |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Summary of Significant Accounting Policies | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The accompanying interim unaudited condensed consolidated financial statements of Solaris 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. Operating results for the three months ended March 31, 2019 and 2018 are not necessarily indicative of the results that may be expected for the full year or for any interim period. The unaudited interim condensed consolidated financial statements should be read in conjunction with Solaris Inc.’s Annual Report on Form 10-K/A for the year ended December 31, 2018. 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. All material intercompany transactions and balances have been eliminated upon consolidation. |
Restatement of Previously Reported Financial Statements | Restatement of Previously Reported Financial Statements Subsequent to filing the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, the Company determined there was an error affecting the deferred tax asset, additional paid-in capital, non-controlling interest and retained earnings accounts reported in the Company’s Annual Reports on Forms 10-K for the periods ended December 31, 2017 and 2018, and in the Company’s Quarterly Reports on Forms 10-Q during 2018 and for the period ended March 31, 2019 (together, the “Restated Periods”). The error also affected the provision for income taxes in the year ended December 31, 2017. The error had no impact on the calculations of EBITDA or Adjusted EBITDA, or on cash or total cash from operations for any of the Restated Periods. The errors were primarily related to accounting for the balance sheet impact of the Company’s November Offering in the fourth quarter of 2017 and subsequent exchanges of membership interests in Solaris LLC (together with a corresponding number of shares of Class B common stock) for shares of Class A common stock in the Company and contributions of Class A shares in connection with stock based compensation. The restatement had no impact on the unaudited condensed consolidated statement of operations or unaudited condensed consolidated statements of cash flows for the quarters ending March 31, 2019 and 2018. The table below sets forth the unaudited condensed consolidated balance sheet, including the balances originally reported, corrections and the as adjusted balances for the restated period ending March 31, 2019: March 31, 2019 As Reported Adjustments Adjusted Deferred tax assets $ 25,258 $ 37,426 $ 62,684 Total assets 431,553 37,426 468,979 Additional paid-in capital 131,740 56,718 188,458 Retained Earnings 51,983 (7,810) 44,173 Total stockholders' equity attributable to Solaris 182,182 48,908 231,090 Non-controlling interest 138,255 (11,482) 126,773 Total stockholders' equity 320,437 37,426 357,863 Total liabilities and stockholders' equity 431,553 37,426 468,979 The table below sets forth the unaudited condensed consolidated statement of changes in stockholders’ equity, including the balances originally reported, corrections and the as adjusted balances for the restated period ending March 31, 2019: Additional Non- Total Paid-In Retained Controlling Stockholders' (In thousands) Capital Earnings Interest Equity Balance at March 31, 2019, as reported $ 131,740 $ 51,983 $ 138,255 $ 320,437 Correction 56,718 (7,810) (11,482) 37,426 Balance at March 31, 2019, as adjusted 188,458 44,173 126,773 357,863 |
Use of Estimates | Restatement of Previously Reported Financial Statements Subsequent to filing the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, the Company determined there was an error affecting the deferred tax asset, additional paid-in capital, non-controlling interest and retained earnings accounts reported in the Company’s Annual Reports on Forms 10-K for the periods ended December 31, 2017 and 2018, and in the Company’s Quarterly Reports on Forms 10-Q during 2018 and for the period ended March 31, 2019 (together, the “Restated Periods”). The error also affected the provision for income taxes in the year ended December 31, 2017. The error had no impact on the calculations of EBITDA or Adjusted EBITDA, or on cash or total cash from operations for any of the Restated Periods. The errors were primarily related to accounting for the balance sheet impact of the Company’s November Offering in the fourth quarter of 2017 and subsequent exchanges of membership interests in Solaris LLC (together with a corresponding number of shares of Class B common stock) for shares of Class A common stock in the Company and contributions of Class A shares in connection with stock based compensation. The restatement had no impact on the unaudited condensed consolidated statement of operations or unaudited condensed consolidated statements of cash flows for the quarters ending March 31, 2019 and 2018. The table below sets forth the unaudited condensed consolidated balance sheet, including the balances originally reported, corrections and the as adjusted balances for the restated period ending March 31, 2019: March 31, 2019 As Reported Adjustments Adjusted Deferred tax assets $ 25,258 $ 37,426 $ 62,684 Total assets 431,553 37,426 468,979 Additional paid-in capital 131,740 56,718 188,458 Retained Earnings 51,983 (7,810) 44,173 Total stockholders' equity attributable to Solaris 182,182 48,908 231,090 Non-controlling interest 138,255 (11,482) 126,773 Total stockholders' equity 320,437 37,426 357,863 Total liabilities and stockholders' equity 431,553 37,426 468,979 The table below sets forth the unaudited condensed consolidated statement of changes in stockholders’ equity, including the balances originally reported, corrections and the as adjusted balances for the restated period ending March 31, 2019: Additional Non- Total Paid-In Retained Controlling Stockholders' (In thousands) Capital Earnings Interest Equity Balance at March 31, 2019, as reported $ 131,740 $ 51,983 $ 138,255 $ 320,437 Correction 56,718 (7,810) (11,482) 37,426 Balance at March 31, 2019, as adjusted 188,458 44,173 126,773 357,863 Use of Estimates The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates used in the preparation of these condensed consolidated financial statements include, but are not limited to, 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, determination of the present value of lease payments and right-of-use assets 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 March 31, 2019 and December 31, 2018. |
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 condensed consolidated statements of operations. There were no impairments recorded for the three months ended March 31, 2019 and 2018. |
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 are considered property, plant and equipment. However, the systems do not depreciate until they are fully completed. Systems 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 condensed consolidated financial statements and any resulting gain or loss is recognized in the condensed 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 well as patents that were filed for our systems and other intellectual property. Amortization on these assets is calculated on the straight-line method over the estimated useful lives of the assets, which is five to fifteen years based on estimates the Company believes are reasonable. The Company recorded amortization expense of $195 and $216 for the three months ended March 31, 2019 and 2018, respectively. Identified intangible assets by major classification consist of the following: Accumulated Net Book Gross Amortization Value As of March 31, 2019: Customer relationships $ 4,703 $ (896) $ 3,807 Software acquired in the acquisition of Railtronix 346 (66) 280 Non-competition agreement 225 (60) 165 Patents and other 114 (21) 93 Total identifiable intangibles $ 5,388 $ (1,043) $ 4,345 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 |
Leases | Leases The Company accounts for leases in accordance with Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC Topic 842”), which the Company adopted under ASU No. 2016-02 “Leases (Topic 842)” effective January 1, 2019. The Company applied ASC Topic 842 to all leases existing at or commencing after January 1, 2019 and elected the package of transition practical expedients for expired or existing contracts, which does not require reassessment of: (1) whether any of our contracts are or contain leases, (2) lease classification and (3) initial direct costs. The Company also elected the practical expedient to adopt the new lease requirements through a cumulative effect adjustment in the period of adoption and did not adjust comparative periods. As a result of the adoption of ASC Topic 842 on January 1, 2019, the Company recorded operating ROU assets of $8,503, operating lease liabilities of $9,016 and a cumulative effect adjustment to retained earnings for operating leases of $532. We determine if an arrangement is a lease at inception. The Company made the election to not apply the recognition requirements in ASC Topic 842 to short-term leases (i.e., leases of twelve months or less). Instead, the Company recognizes the lease payments in profit or loss on a straight-line basis over the lease term. Operating leases are included in operating lease ROU assets, current portion of operating lease liabilities, and operating lease liabilities, net of current in the Company’s condensed consolidated balance sheets. Finance leases are included in property and equipment, current portion of finance lease liabilities, and finance lease liabilities, net of current in the Company’s condensed consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, we use our incremental borrowing rate in determining the present value of lease payments based on the information available at the commencement date. Our incremental borrowing rate reflects the estimated rate of interest that we would pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. We use the implicit rate when readily determinable. The ROU asset also includes any lease payments made and excludes lease incentives received. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. |
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 March 31, 2019 and December 31, 2018, 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. 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 three months ended March 31, 2019 and 2018. 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 indicators for the three months ended March 31, 2019 and 2018. |
Revenue Recognition | Revenue Recognition 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 and chemicals at oil and natural gas well sites, which is considered to be our performance obligation. 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 proppant delivered and transloaded at the facility. Under 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. The Company recorded $474 of shortfall revenue during the three months ended March 31, 2019. 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. 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 fee received in December 2018 in accordance with a contract modification which is accounted for prospectively. The partial termination payment fee 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. Deferred revenues in the condensed consolidated balance sheets were $22,323 and $25,458 as of March 31, 2019 and December 31, 2018, respectively, which will be recognized as Revenue from transloading services over the remaining two-year term of the modified agreement. The Company recognized $3,134 of deferred revenue as Revenue from transloading services in the condensed consolidated statements of operations for the three months ended March 31, 2019. No deferred revenue was recorded or recognized as revenue during the three months ended March 31, 2018. |
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 condensed consolidated statements of operations based on their fair values on the date of grant. The Company recognizes expense on a straight-line basis over the awards’ vesting period, which is generally the requisite service period. |
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 condensed consolidated statements of operations. There were no research and development costs for the three months ended March 31, 2019 and 2018. |
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 March 31, 2019, we had no 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 three months ended March 31, 2019 and 2018, we recognized a combined United States federal and state provision for income taxes of $4,181 and $2,027, respectively. Solaris LLC is treated as a partnership for United States federal income tax purposes and therefore does not pay United States federal income tax on its taxable income. Instead, the Solaris LLC members are liable for United States federal income tax on their respective shares of the Company’s taxable income reported on the members’ United States 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 March 31, 2019 and December 31, 2018. 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 condensed 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 condensed 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 9. “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 and 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 IPO or pursuant to the exercise of the Redemption Right or the Call Right (each as defined in Solaris LLC’s Second Amended and Restated Limited Liability Company Agreement (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 March 31, 2019 and December 31, 2018, Solaris Inc. recorded a payable related to the Tax Receivable Agreement of $66,648 and $56,149, 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 March 31, 2019 and December 31, 2018, 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 Issued But Not Yet Adopted In August 2018, the Financial Accounting Standards Board (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”), which 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 condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which replaces the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 requires the use of a forward-looking expected credit loss model for accounts receivables, loans and other financial instruments. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. Adoption of ASU 2016-13 will be applied using a modified-retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. We are currently in the process of evaluating the impact, if any, that ASU 2016-13 will have on our condensed consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Summary of Significant Accounting Policies | |
Schedule of restatements | The table below sets forth the unaudited condensed consolidated balance sheet, including the balances originally reported, corrections and the as adjusted balances for the restated period ending March 31, 2019: March 31, 2019 As Reported Adjustments Adjusted Deferred tax assets $ 25,258 $ 37,426 $ 62,684 Total assets 431,553 37,426 468,979 Additional paid-in capital 131,740 56,718 188,458 Retained Earnings 51,983 (7,810) 44,173 Total stockholders' equity attributable to Solaris 182,182 48,908 231,090 Non-controlling interest 138,255 (11,482) 126,773 Total stockholders' equity 320,437 37,426 357,863 Total liabilities and stockholders' equity 431,553 37,426 468,979 The table below sets forth the unaudited condensed consolidated statement of changes in stockholders’ equity, including the balances originally reported, corrections and the as adjusted balances for the restated period ending March 31, 2019: Additional Non- Total Paid-In Retained Controlling Stockholders' (In thousands) Capital Earnings Interest Equity Balance at March 31, 2019, as reported $ 131,740 $ 51,983 $ 138,255 $ 320,437 Correction 56,718 (7,810) (11,482) 37,426 Balance at March 31, 2019, as adjusted 188,458 44,173 126,773 357,863 |
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 March 31, 2019: Customer relationships $ 4,703 $ (896) $ 3,807 Software acquired in the acquisition of Railtronix 346 (66) 280 Non-competition agreement 225 (60) 165 Patents and other 114 (21) 93 Total identifiable intangibles $ 5,388 $ (1,043) $ 4,345 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 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Prepaid Expenses and Other Current Assets. | |
Schedule of prepaid expenses and other current assets | March 31, December 31, 2019 2018 Prepaid purchase orders $ 1,975 $ 2,802 Prepaid insurance 166 576 Deposits 1,178 882 Other assets 1,039 1,232 Prepaid expenses and other current assets $ 4,358 $ 5,492 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment. | |
Schedule of property plant and equipment | March 31, December 31, 2019 2018 Systems and related equipment $ 264,729 $ 254,795 Systems in process 20,930 11,245 Transloading facility and equipment 40,249 40,218 Computer and related equipment 5,511 4,990 Machinery and equipment 5,136 5,126 Vehicles 8,322 8,334 Buildings 4,314 4,280 Land 612 612 Furniture and fixtures 284 282 Property, plant and equipment, gross 350,087 329,882 Less: accumulated depreciation (39,583) (33,344) Property, plant and equipment, net $ 310,504 $ 296,538 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accrued Liabilities | |
Schedule of accrued liabilities | March 31, December 31, 2019 2018 Property, plant and equipment $ 184 $ 2,153 Employee related expenses 2,626 4,500 Selling, general and administrative 1,200 944 Cost of revenue 3,799 2,702 Excise, franchise and sales taxes 1,643 1,461 Ad valorem taxes 441 774 Other 76 124 Accrued liabilities $ 9,969 $ 12,658 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases | |
Schedule of components of lease expense | Three Months Ended March 31, 2019 Operating lease cost (1) (2) $ 297 Finance lease cost Amortization of ROU assets 8 Interest on lease liabilities 1 Total finance lease cost $ 9 |
Schedule of non-cancellable operating leases as of December 31, 2018 | 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 |
Schedule of future minimum operating lease payments | Future minimum lease payments under non-cancellable operating leases as of December 31, 2018 were 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 Future minimum lease payments under non-cancellable leases as of March 31, 2019 were as follows: Year Ending December 31, Operating Leases Finance Leases 2019 (remainder of) $ 879 $ 31 2020 1,116 35 2021 1,060 33 2022 1,091 33 2023 1,100 33 Thereafter 9,463 40 Total future minimum lease payments 14,709 205 Less: effects of discounting (5,792) (21) Total lease liabilities $ 8,917 $ 184 |
Schedule of future minimum finance lease payments | Year Ending December 31, Operating Leases Finance Leases 2019 (remainder of) $ 879 $ 31 2020 1,116 35 2021 1,060 33 2022 1,091 33 2023 1,100 33 Thereafter 9,463 40 Total future minimum lease payments 14,709 205 Less: effects of discounting (5,792) (21) Total lease liabilities $ 8,917 $ 184 |
Schedule of other information | Three Months Ended March 31, 2019 Supplemental Cash Flows Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 241 Financing cash flows from finance leases 9 Weighted Average Remaining Lease Term Operating leases 14.3 years Finance leases 5.8 years Weighted Average Discount Rate Operating leases Finance leases |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Equity | |
Summary of activity related to restricted stock | Restricted Stock Awards 2019 2018 Unvested at January 1, 411,497 1,218,265 Awarded 375,068 2,120 Vested (706) — Forfeited (405) (848) Unvested at March 31, 785,454 1,219,537 |
Schedule of earnings per share calculation | Three Months Ended March 31, Basic net income per share: 2019 2018 Numerator Net income attributable to Solaris $ 12,317 $ 5,930 Less income attributable to participating securities (1) (253) (288) Net income attributable to common stockholders $ 12,064 $ 5,642 Denominator Weighted average number of unrestricted outstanding common shares used to calculate basic net income per share 28,028 23,884 Effect of dilutive securities: Stock options (2) 87 189 Diluted weighted-average shares of Class A common stock outstanding used to calculate diluted net income per share 28,115 24,073 Earnings per share of Class A common stock - basic $ 0.43 $ 0.24 Earnings per share of Class A common stock - diluted $ 0.43 $ 0.23 (1) The Company’s restricted shares of common stock are participating securities. (2) The three months ended March 31, 2019 and 2018 include 87 shares and 189 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 | Three Months Ended March 31, 2019 2018 Class B common stock 18,711 22,172 Restricted stock awards 117 635 Total 18,828 22,807 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies | |
Schedule of contractual obligation future payments | The table below provides estimates of the timing of future payments that we are contractually obligated to make based on agreements in place at March 31, 2019: For the Year Ending December 31, 2019 2020 2021 2022 2023 Thereafter Total (in thousands) Operating lease obligations (1) $ 879 $ 1,116 $ 1,060 $ 1,091 $ 1,100 $ 9,463 $ 14,709 Finance lease obligations (2) 31 35 33 33 33 40 205 Commitment fees on Revolving Loan (3) 75 100 100 5 — — 280 Purchase commitments (4) 9,685 — — — — — 9,685 Other commitments 195 259 239 25 — — 718 Total $ 10,865 $ 1,510 $ 1,432 $ 1,154 $ 1,133 $ 9,503 25,597 (1) (2) (3) (4) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Restatement (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Deferred tax assets | $ 62,684 | $ 58,074 | ||
Total assets | 468,979 | 458,607 | ||
Additional paid-in capital | 188,458 | 164,086 | ||
Retained earnings | 44,173 | 35,507 | ||
Total stockholders' equity attributable to Solaris | 231,090 | 198,450 | ||
Non-controlling interest | 126,773 | 142,428 | ||
Total stockholders' equity | 357,863 | 340,878 | $ 270,037 | $ 254,243 |
Total liabilities and stockholders' equity | 468,979 | $ 458,607 | ||
Reported | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Deferred tax assets | 25,258 | |||
Total assets | 431,553 | |||
Additional paid-in capital | 131,740 | |||
Retained earnings | 51,983 | |||
Total stockholders' equity attributable to Solaris | 182,182 | |||
Non-controlling interest | 138,255 | |||
Total stockholders' equity | 320,437 | |||
Total liabilities and stockholders' equity | 431,553 | |||
Adjustments | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Deferred tax assets | 37,426 | |||
Total assets | 37,426 | |||
Additional paid-in capital | 56,718 | |||
Retained earnings | (7,810) | |||
Total stockholders' equity attributable to Solaris | 48,908 | |||
Non-controlling interest | (11,482) | |||
Total stockholders' equity | 37,426 | |||
Total liabilities and stockholders' equity | $ 37,426 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - AR and inventory (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | |
Allowance for doubtful accounts | $ 0 | $ 0 | |
Inventory impairment | $ 0 | $ 0 | |
Maximum | |||
Accounts receivable due period | 60 days |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Property (Details) | 3 Months Ended |
Mar. 31, 2019 | |
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 |
Software acquired in the acquisition of Railtronix | Minimum | |
Property, Plant and Equipment | |
Property, plant and equipment useful life | 5 years |
Software acquired in the acquisition of Railtronix | 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_7
Summary of Significant Accounting Policies - Intangibles (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Intangible assets by major classification | |||
Intangible amortization expense | $ 195 | $ 216 | |
Gross | 5,388 | $ 5,388 | |
Accumulated Amortization | (1,043) | (848) | |
Net Book Value | 4,345 | 4,540 | |
Goodwill | 17,236 | 17,236 | |
Goodwill impairment | 0 | 0 | |
Impairment of long-lived assets | 0 | 0 | |
Impairment of definite-lived intangible assets | 0 | $ 0 | |
Customer relationships | |||
Intangible assets by major classification | |||
Gross | 4,703 | 4,703 | |
Accumulated Amortization | (896) | (727) | |
Net Book Value | 3,807 | 3,976 | |
Software acquired in the acquisition of Railtronix | |||
Intangible assets by major classification | |||
Gross | 346 | 346 | |
Accumulated Amortization | (66) | (54) | |
Net Book Value | 280 | 292 | |
Non-competition agreement | |||
Intangible assets by major classification | |||
Gross | 225 | 225 | |
Accumulated Amortization | (60) | (49) | |
Net Book Value | 165 | 176 | |
Patents and other | |||
Intangible assets by major classification | |||
Gross | 114 | 114 | |
Accumulated Amortization | (21) | (18) | |
Net Book Value | $ 93 | $ 96 | |
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_8
Summary of Significant Accounting Policies - Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |||
Lease, Practical Expedients, Package [true false] | true | ||
ROU assets | $ 8,348 | ||
Operating lease liabilities | 8,917 | ||
Retained earnings | 44,173 | $ 35,507 | |
Adjustments | |||
Summary of Significant Accounting Policies | |||
Retained earnings | $ (7,810) | ||
ASU 2016-02 | Adjustments | |||
Summary of Significant Accounting Policies | |||
ROU assets | $ 8,503 | ||
Operating lease liabilities | 9,016 | ||
Retained earnings | $ (532) |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |||
Shortfall revenue | $ 474 | ||
Termination payment received | $ 25,980 | ||
Remaining deferred revenue | 22,323 | $ 25,458 | |
Deferred revenue recognized | $ 3,134 | $ 0 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01 | |||
Summary of Significant Accounting Policies | |||
Remaining performance obligation, terms | 2 years | ||
System rental | Minimum | |||
Summary of Significant Accounting Policies | |||
Payment terms | 30 days | ||
System rental | Maximum | |||
Summary of Significant Accounting Policies | |||
Payment terms | 60 days | ||
System services | Minimum | |||
Summary of Significant Accounting Policies | |||
Payment terms | 30 days | ||
System services | Maximum | |||
Summary of Significant Accounting Policies | |||
Payment terms | 60 days | ||
Transloading services | Minimum | |||
Summary of Significant Accounting Policies | |||
Payment terms | 30 days | ||
Transloading services | Maximum | |||
Summary of Significant Accounting Policies | |||
Payment terms | 60 days |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Misc (Details) $ in Thousands | May 17, 2017 | Mar. 31, 2019USD ($)segment | Mar. 31, 2018USD ($) | Dec. 31, 2018USD ($) |
Provision for income taxes | $ 4,181 | $ 2,027 | ||
Payables related to Tax Receivable Agreement | 66,648 | $ 56,149 | ||
Environmental matters deemed probable | $ 0 | 0 | ||
Number of operating segments | segment | 1 | |||
Credit Agreement | ||||
Outstanding credit facility | $ 0 | 13,000 | ||
Tax Receivable Agreement | ||||
Payments of net cash saving (as a percent) | 85.00% | 85.00% | ||
Payables related to Tax Receivable Agreement | $ 66,648 | $ 56,149 | ||
Benefit of remaining cash savings (as a percent) | 15.00% |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Prepaid Expenses and Other Current Assets. | ||
Prepaid purchase orders | $ 1,975 | $ 2,802 |
Prepaid insurance | 166 | 576 |
Deposits | 1,178 | 882 |
Other assets | 1,039 | 1,232 |
Prepaid expenses and other current assets | $ 4,358 | $ 5,492 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment | ||
Property, plant and equipment, gross | $ 350,087 | $ 329,882 |
Less: accumulated depreciation | (39,583) | (33,344) |
Property, plant and equipment, net | 310,504 | 296,538 |
Systems and related equipment | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 264,729 | 254,795 |
Systems in process | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 20,930 | 11,245 |
Transloading facility and equipment | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 40,249 | 40,218 |
Computer and related equipment | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 5,511 | 4,990 |
Machinery and equipment | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 5,136 | 5,126 |
Vehicles | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 8,322 | 8,334 |
Buildings | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 4,314 | 4,280 |
Land | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 612 | 612 |
Furniture and fixtures | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | $ 284 | $ 282 |
Property, Plant and Equipment -
Property, Plant and Equipment - Depreciation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Property, Plant and Equipment | ||
Depreciation expense | $ 6,150 | $ 2,986 |
Capitalized depreciation in property, plant and equipment | 186 | 140 |
Selling, general and administrative expenses | ||
Property, Plant and Equipment | ||
Depreciation expense | 117 | 109 |
System rental | ||
Property, Plant and Equipment | ||
Depreciation expense | 5,226 | 2,635 |
System services | ||
Property, Plant and Equipment | ||
Depreciation expense | 398 | 237 |
Transloading services | ||
Property, Plant and Equipment | ||
Depreciation expense | $ 409 | $ 5 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Accrued Liabilities | ||
Property, plant and equipment | $ 184 | $ 2,153 |
Employee related expenses | 2,626 | 4,500 |
Selling, general and administrative | 1,200 | 944 |
Cost of revenue | 3,799 | 2,702 |
Excise, franchise and sales taxes | 1,643 | 1,461 |
Ad valorem taxes | 441 | 774 |
Other | 76 | 124 |
Accrued liabilities | $ 9,969 | $ 12,658 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Leases | ||
Property, plant and equipment, cost | $ 350,087 | $ 329,882 |
Accumulated depreciation | 39,583 | 33,344 |
Finance leased assets | ||
Leases | ||
Property, plant and equipment, cost | 299 | 299 |
Accumulated depreciation | $ 90 | $ 85 |
Kingfisher Facility | ||
Leases | ||
Term | 30 years |
Leases - Lease cost (Details)
Leases - Lease cost (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Components of lease expenses: | |
Operating lease cost | $ 297 |
Finance lease cost | |
Amortization of ROU assets | 8 |
Interest on lease liabilities | 1 |
Total finance lease cost | 9 |
Selling, general and administrative expenses | |
Components of lease expenses: | |
Operating lease cost | 20 |
Cost of sales | System rental | |
Components of lease expenses: | |
Operating lease cost | 92 |
Cost of sales | Transloading services | |
Components of lease expenses: | |
Operating lease cost | $ 185 |
Leases - Maturities (Details)
Leases - Maturities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Non-cancellable operating leases as of December 31, 2018 | ||
2019 | $ 1,432 | |
2020 | 1,375 | |
2021 | 1,299 | |
2022 | 1,093 | |
2023 | 1,092 | |
Thereafter | 9,725 | |
Total minimum lease payments | $ 16,016 | |
Operating lease obligations | ||
2019 (remainder of) | $ 879 | |
2020 | 1,116 | |
2021 | 1,060 | |
2022 | 1,091 | |
2023 | 1,100 | |
Thereafter | 9,463 | |
Total future minimum lease payments | 14,709 | |
Less: effects of discounting | (5,792) | |
Total lease liabilities | 8,917 | |
Finance lease obligations | ||
2019 (remainder of) | 31 | |
2020 | 35 | |
2021 | 33 | |
2022 | 33 | |
2023 | 33 | |
Thereafter | 40 | |
Total future minimum lease payments | 205 | |
Less: effects of discounting | (21) | |
Total lease liabilities | $ 184 |
Leases - Other (Details)
Leases - Other (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Leases | ||
Operating cash flows from operating leases | $ 241 | |
Financing cash flows from finance leases | $ 9 | $ 7 |
Weighted Average Remaining Lease Term - Operating leases | 14 years 3 months 18 days | |
Weighted Average Remaining Lease Term - Finance leases | 5 years 9 months 18 days | |
Weighted Average Discount Rate - Operating leases | 6.30% | |
Weighted Average Discount Rate - Finance leases | 3.30% |
Senior Secured Credit Facility
Senior Secured Credit Facility (Details) $ in Thousands | Apr. 26, 2019USD ($) | Jan. 19, 2018USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Credit Agreement | ||||
Senior Secured Credit Facility | ||||
Maximum borrowing | $ 50,000 | |||
Potential additional borrowing available | 25,000 | |||
Maximum borrowing capacity with accordion option | 75,000 | |||
Outstanding credit facility | $ 0 | $ 13,000 | ||
Remaining borrowing capacity | $ 50,000 | |||
Indebtedness to consolidated EBITDA | 2.5 | |||
Cash adjustment to indebtedness and senior indebtedness ratio | $ 10,000 | |||
Percentage of cash adjustment to indebtedness and senior indebtedness ratio | 50.00% | |||
Maximum capital expenditures allowed in 2019 | $ 75,000 | |||
Credit Agreement | Minimum | ||||
Senior Secured Credit Facility | ||||
Ratio of consolidated EBITDA to fixed charges | 1.25% | |||
Credit Agreement | Beginning April 1, 2018 | ||||
Senior Secured Credit Facility | ||||
Indebtedness to consolidated EBITDA | 3.25 | |||
Senior indebtedness to consolidated EBITDA | 2.25 | |||
Credit Agreement | Beginning April 1, 2018 | Minimum | ||||
Senior Secured Credit Facility | ||||
Indebtedness to consolidated EBITDA | 3.50 | |||
Senior indebtedness to consolidated EBITDA | 2.50 | |||
Credit Agreement | Beginning October 1, 2018 | ||||
Senior Secured Credit Facility | ||||
Indebtedness to consolidated EBITDA | 3 | |||
Senior indebtedness to consolidated EBITDA | 2 | |||
Credit Agreement | One-month LIBOR | Minimum | ||||
Senior Secured Credit Facility | ||||
Applicable margin rate | 3.00% | |||
Credit Agreement | One-month LIBOR | Maximum | ||||
Senior Secured Credit Facility | ||||
Applicable margin rate | 3.50% | |||
Advance Loan | ||||
Senior Secured Credit Facility | ||||
Maximum borrowing | $ 50,000 | |||
Advance loan, as percentage of current net orderly liquidation value | 80.00% | |||
Revolving Loan | ||||
Senior Secured Credit Facility | ||||
Maximum borrowing | $ 20,000 | |||
Potential additional borrowing available | $ 10,000 | |||
Eligible inventory value (as a percent) | 35.00% | |||
Weighted average interest rate (as a percent) | 5.49% | |||
Commitment fee (as a percent) | 0.50% | |||
Revolving Loan | Minimum | ||||
Senior Secured Credit Facility | ||||
Commitment fee (as a percent) | 0.25% | |||
Revolving Loan | Maximum | ||||
Senior Secured Credit Facility | ||||
Commitment fee (as a percent) | 0.50% |
Equity - Dividends (Details)
Equity - Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 29, 2019 | Mar. 31, 2019 |
Stock-based compensation | ||
Cash dividends paid (in dollars per share) | $ 0.10 | $ 0.1 |
Distributions paid to unit holders | $ 4,757 | |
Distributions paid to unit holders (in dollars per unit) | $ 0.10 | |
Distribution received | $ 3,119 | |
Dividend paid to common stock | 3,119 | |
Dividends paid to restricted stock | 79 | |
Solaris LLC | ||
Stock-based compensation | ||
Distributions paid to unit holders | $ 4,757 | |
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 | Mar. 31, 2019 | Mar. 31, 2018 |
Stock-based compensation | |||
Stock-based compensation expense | $ 862 | $ 1,513 | |
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 | ||
Options exercised (in shares) | 511,656 | ||
Forfeited (in shares) | 33,346 | ||
Options outstanding (in shares) | 46,259 | ||
Vesting period | 4 years | ||
Stock-based compensation expense | $ 0 | $ 0 | |
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 |
Equity - Restricted stock (Deta
Equity - Restricted stock (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Other non-option information | ||
Stock-based compensation expense | $ 862 | $ 1,513 |
System rental | ||
Other non-option information | ||
Stock-based compensation expense | 4 | 5 |
System services | ||
Other non-option information | ||
Stock-based compensation expense | 64 | $ 40 |
Transloading services | ||
Other non-option information | ||
Stock-based compensation expense | $ 3 | |
Restricted stock | ||
Number of Shares | ||
Unvested, beginning (in shares) | 411,497 | 1,218,265 |
Awarded (in shares) | 375,068 | 2,120 |
Vested (in shares) | (706) | |
Forfeited (in shares) | (405) | (848) |
Unvested, end (in shares) | 785,454 | 1,219,537 |
Restricted stock | First vesting period | ||
Number of Shares | ||
Unvested, end (in shares) | 213,501 | |
Restricted stock | Second vesting period | ||
Number of Shares | ||
Unvested, end (in shares) | 304,680 | |
Restricted stock | Third vesting period | ||
Number of Shares | ||
Unvested, end (in shares) | 142,252 | |
Restricted stock | Fourth vesting period | ||
Number of Shares | ||
Unvested, end (in shares) | 125,021 | |
Restricted stock | Salaries, benefits and payroll taxes | ||
Other non-option information | ||
Stock-based compensation expense | $ 791 | $ 1,468 |
Restricted stock | Property, Plant and Equipment | ||
Other non-option information | ||
Stock-based compensation expense | 37 | 361 |
Restricted stock | System rental | ||
Other non-option information | ||
Stock-based compensation expense | 4 | 5 |
Restricted stock | System services | ||
Other non-option information | ||
Stock-based compensation expense | 64 | $ 40 |
Restricted stock | Transloading services | ||
Other non-option information | ||
Stock-based compensation expense | $ 3 |
Equity - EPS (Details)
Equity - EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Numerator | ||
Net income attributable to Solaris | $ 12,317 | $ 5,930 |
Less income attributable to participating securities | (253) | (288) |
Net income attributable to common stockholders | $ 12,064 | $ 5,642 |
Class A Common Stock | ||
Denominator | ||
Weighted average number of unrestricted outstanding common shares used to calculate basic net income per share (in shares) | 28,028 | 23,884 |
Effect of dilutive securities: | ||
Stock options (in shares) | 87 | 189 |
Diluted weighted-average shares of Class A common stock outstanding used to calculate diluted net income per share (in shares) | 28,115 | 24,073 |
Earnings per share of Class A common stock - basic (in dollars per share) | $ 0.43 | $ 0.24 |
Earnings per share of Class A common stock - diluted (in dollars per share) | $ 0.43 | $ 0.23 |
Equity - Antidilutive (Details)
Equity - Antidilutive (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Potentially dilutive shares | ||
Excluded from EPS calculation (in shares) | 18,828 | 22,807 |
Class B Common Stock | ||
Potentially dilutive shares | ||
Excluded from EPS calculation (in shares) | 18,711 | 22,172 |
Restricted stock | ||
Potentially dilutive shares | ||
Excluded from EPS calculation (in shares) | 117 | 635 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | May 17, 2017 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 |
Effective tax rate | 15.21% | 12.97% | ||
Unrecognized tax benefits | $ 816 | |||
Payables related to Tax Receivable Agreement | 66,648 | $ 56,149 | ||
Tax Receivable Agreement | ||||
Payables related to Tax Receivable Agreement | $ 66,648 | $ 56,149 | ||
Percentage of Net Cash Saving | 85.00% | 85.00% |
Concentrations (Details)
Concentrations (Details) - item | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Customer | Revenue | |||
Concentrations | |||
Number of customers | 4 | 4 | |
Customer | Revenue | Customer One | |||
Concentrations | |||
Concentration risk (as a percent) | 15.00% | 18.00% | |
Customer | Revenue | Customer Two | |||
Concentrations | |||
Concentration risk (as a percent) | 13.00% | 12.00% | |
Customer | Revenue | Customer Three | |||
Concentrations | |||
Concentration risk (as a percent) | 12.00% | 11.00% | |
Customer | Revenue | Customer Four | |||
Concentrations | |||
Concentration risk (as a percent) | 11.00% | 10.00% | |
Customer | Accounts receivable | |||
Concentrations | |||
Number of customers | 3 | 3 | |
Customer | Accounts receivable | Customer One | |||
Concentrations | |||
Concentration risk (as a percent) | 21.00% | 20.00% | |
Customer | Accounts receivable | Customer Two | |||
Concentrations | |||
Concentration risk (as a percent) | 15.00% | 10.00% | |
Customer | Accounts receivable | Customer Three | |||
Concentrations | |||
Concentration risk (as a percent) | 11.00% | 10.00% | |
Supplier | Purchases | |||
Concentrations | |||
Number of suppliers | 1 | 1 | |
Supplier | Purchases | Supplier One | |||
Concentrations | |||
Concentration risk (as a percent) | 14.00% | 10.00% | |
Supplier | Accounts payables | |||
Concentrations | |||
Number of suppliers | 1 | 1 | |
Supplier | Accounts payables | Supplier One | |||
Concentrations | |||
Concentration risk (as a percent) | 13.00% | 13.00% |
Commitments and Contingencies_2
Commitments and Contingencies (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Mar. 31, 2018USD ($) | Mar. 31, 2019USD ($)item | Dec. 31, 2018USD ($) | Dec. 06, 2017USD ($) | |
Operating lease obligations | ||||
2019 (remainder of) | $ 879 | |||
2020 | 1,116 | |||
2021 | 1,060 | |||
2022 | 1,091 | |||
2023 | 1,100 | |||
Thereafter | 9,463 | |||
Total future minimum lease payments | 14,709 | |||
Finance lease obligations | ||||
2019 (remainder of) | 31 | |||
2020 | 35 | |||
2021 | 33 | |||
2022 | 33 | |||
2023 | 33 | |||
Thereafter | 40 | |||
Total future minimum lease payments | 205 | |||
Commitment fees on Revolving Loan | ||||
2019 | 75 | |||
2020 | 100 | |||
2021 | 100 | |||
2022 | 5 | |||
Total | 280 | |||
Purchase commitments | ||||
2019 | 9,685 | |||
Total | 9,685 | |||
Other commitments | ||||
2019 | 195 | |||
2020 | 259 | |||
2021 | 239 | |||
2022 | 25 | |||
Total | 718 | |||
Total | ||||
2019 | 10,865 | |||
2020 | 1,510 | |||
2021 | 1,432 | |||
2022 | 1,154 | |||
2023 | 1,133 | |||
Thereafter | 9,503 | |||
Total | $ 25,597 | |||
Railtronix LLC | ||||
Other Commitments | ||||
Performance-based cash awards liability | $ 2,500 | |||
Number of completed milestones | item | 1 | |||
Contingent consideration payment | $ 1,625 | |||
Raw material purchases | ||||
Other commitments | ||||
Total | $ 9,685 | $ 18,998 | ||
Solaris Energy Management, LLC | ||||
Other commitments | ||||
Total | $ 9,971 | |||
Revolving Loan | ||||
Commitment fees on Revolving Loan | ||||
Commitment fee (as a percent) | 0.50% | |||
Kingfisher Facility | ||||
Operating lease obligations | ||||
Term | 30 years |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Related Party Transactions | |||
Due from related party | $ 238 | $ 232 | |
Due to related party | 103 | $ 103 | |
William A. Zartler | |||
Related Party Transactions | |||
Payment made to related party | $ 278 | $ 214 |