Solaris Oilfield Infrastructure, Inc. — FY 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. The filing reports annual results; the supplied text does not provide a clear standalone fourth-quarter financial breakdown. The company designs and manufactures equipment and provides field support, logistics, and software for oil and gas well completions.
Financial results and liquidity
| Metric | FY 2023 | FY 2022 |
|---|---|---|
| Revenue | $292.9 million | $320.0 million |
| Operating income | $49.9 million | $41.8 million |
| Net income | $38.8 million | $33.5 million |
| Net income attributable to Solaris | $24.3 million | $21.2 million |
| Class A diluted EPS | $0.78 | $0.64 |
| EBITDA / Adjusted EBITDA | $86.1 million / $96.7 million | $72.2 million / $83.8 million |
| Cash from operations | $89.9 million | $68.0 million |
| Capital expenditures | $64.4 million | $81.4 million |
- Operating margin was approximately 17.0%, up from 13.1%. Cost of services excluding depreciation fell to 61% of revenue from 69%.
- Revenue declined 8%, primarily due to lower last-mile logistics activity; higher pricing, new services, and a rise in fully utilized systems from 95 to 109 partly offset the decline.
- Cash and cash equivalents were $5.8 million at year-end. Debt under the senior secured credit facility was $30.0 million, with $41.3 million of available borrowing capacity. The weighted average debt rate was 8.38%; the facility matures April 26, 2025. The company reported covenant compliance.
- Current assets were $67.1 million and current liabilities $37.2 million. Total liabilities were $152.7 million; total stockholders’ equity was $315.6 million.
- Financing cash outflows included $26.4 million for share repurchases and $14.1 million in Class A dividends. The company paid $0.45 per Class A share during 2023 and stated its current intended quarterly dividend was $0.12, subject to board discretion and debt restrictions.
Outlook, risks, and unusual items
- Management expects 2024 revenue and profitability to track more closely with U.S. drilling and completion activity. It expects 2024 capital expenditures below $15 million, over 75% below 2023, and said lower capital spending with a relatively stable market should significantly increase cash flow.
- Management cited lower 2023 oil and natural gas prices and declining industry activity, while noting technology-led system growth and pricing supported earnings. It expects oil prices in the mid-$70s per barrel to support sustained oil-directed activity, but results remain exposed to commodity prices, customer spending, consolidation, regulation, supply-chain conditions, and geopolitical events.
- A Texas property-tax exemption dispute remains on appeal. The company accrued $3.1 million; an adverse outcome could materially affect results or cash flows. A ruling was anticipated in the first half of 2024.
- The Tax Receivable Agreement liability was $71.5 million. The company estimated an approximately $69.9 million immediate termination payment under specified circumstances; the amount is an estimate and could differ materially.
- The company recorded a $1.4 million impairment on assets held for sale under a non-binding sale agreement. Interest expense rose to $3.3 million from $0.5 million, primarily due to higher average borrowings and interest rates.
- Customer concentration remains material: two customers each accounted for 12% of 2023 revenue. The company generally does not use long-term customer contracts. It also disclosed related-party revenue and service arrangements.
- Environmental, climate, hydraulic-fracturing, worker-safety, transportation, cybersecurity, and customer-credit risks could increase costs or reduce demand. The previously reported IT general-controls material weakness was remediated as of year-end 2023; management and the auditor reported effective internal control over financial reporting.
- The independent auditor gave an unqualified opinion on the financial statements and internal controls. The audit identified future taxable-income estimates and remediation of prior-year controls affecting last-mile revenue as critical audit matters.
Investor verification priorities
- Confirm 2024 activity, pricing, system utilization, and customer demand against management’s outlook and the stated capital-spending plan.
- Track operating cash flow, capital expenditures, cash balance, borrowing availability, interest costs, and compliance with credit-agreement covenants.
- Review the outcome and potential cash impact of the property-tax appeal and any developments in the Tax Receivable Agreement obligation.
- Monitor customer concentration, related-party transactions, and the company’s ability to retain or redeploy equipment if customers reduce activity.
- Assess execution of the planned reduction in capital spending and whether it translates into higher free cash flow while supporting equipment reliability and growth.