8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 19, 2019

SOLARIS OILFIELD INFRASTRUCTURE, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-38090	81-5223109
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
9811 Katy Freeway, Suite 700 Houston, Texas 77024 (Address of principal executive offices) (Zip Code) (281) 501-3070
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value	“SOI”	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☒

Item 2.02Results of Operations and Financial Condition

On July 19, 2019, Solaris Oilfield Infrastructure, Inc. (the “Company”) issued a press release announcing its preliminary and unaudited operating and financial results for the quarter ended June 30, 2019. A copy of the press release is furnished as Exhibit 99.1 and incorporated by reference herein.

Preliminary and Unaudited Second Quarter 2019 Financial and Operating Results

· Fully utilized mobile proppant management systems averaged 123 systems

· Total revenue expected to be approximately $63-65 million

· Total operating expenses expected to be approximately $36-37 million, including depreciation and amortization expense of $6.5 million and salaries, benefits and payroll taxes and selling, general and administrative expenses of approximately $5 million, including approximately $1 million of non-cash stock-based compensation expense

· Cash balance of approximately $30 million and no debt outstanding at June 30, 2019

The information in this Item 2.02, including Exhibit 99.1 to this Current Report on Form 8-K, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 4.02Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.

The Company is a holding company that owns approximately 67% membership interest in, and serves as the managing member of, Solaris Oilfield Infrastructure, LLC (“Solaris LLC”). The Company is responsible for all operational, management and administrative decisions relating to Solaris LLC's business and consolidates the financial results of Solaris LLC and its subsidiaries and reports the membership interests in Solaris LLC not owned by the Company as a non-controlling interest. The membership interests in Solaris LLC not owned by the Company are exchangeable (together with Class B common stock in the Company) for shares of Class A common stock in the Company.

Restatement of Previously Reported Financial Statements

 (a) 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 follow-on 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. In connection with the adjustments to deferred tax assets in the year ended December 31, 2017, an adjustment to income tax expense will also be recognized due to the remeasurement of deferred tax assets as a result of the Tax Cuts and Jobs Act of 2017 on December 22, 2017. 

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The following tables present the estimated impacts to the Company’s consolidated balance sheets (unaudited, in thousands):

	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

	December 31, 2018
					As
	Reported		Adjustments		Adjusted
Deferred Tax Assets	$	24,624	$	33,450	$	58,074
Total Assets		425,157		33,450		458,607
Additional Paid-In Capital		126,347		37,739		164,086
Retained Earnings		43,317		(7,810)		35,507
Total Stockholders' Equity Attributable to Solaris		168,521		29,929		198,450
Non-Controlling Interest		138,907		3,521		142,428
Total Stockholders' Equity		307,428		33,450		340,878
Total Liabilities and Stockholders' Equity		425,157		33,450		458,607

	December 31, 2017
					As
	Reported		Adjustments		Adjusted
Deferred Tax Assets	$	25,512	$	12,683	$	38,195
Total Assets		287,060		12,683		299,743
Additional Paid-In Capital		121,727		(4,089)		117,638
Retained Earnings (Deficit)		3,636		(7,810)		(4,174)
Total Stockholders' Equity Attributable to Solaris		125,292		(11,899)		113,393
Non-Controlling Interest		116,268		24,582		140,850
Total Stockholders' Equity		241,560		12,683		254,243
Total Liabilities and Stockholders' Equity		287,060		12,683		299,743

The following table presents the estimated impacts to the Company’s consolidated statements of operations (unaudited, in thousands, except per share data):

	For the Year Ended December 31, 2017
					As
	Reported		Adjustments		Adjusted
Provision for Income Taxes	$	(25,899)	$	(7,810)	$	(33,709)
Net Income (Loss)		22,487		(7,810)		14,677
Net Income (Loss) Attributable to Solaris		3,636		(7,810)		(4,174)
Earnings (loss) per share of Class A common stock - basic		0.28		(0.62)		(0.34)
Earnings (loss) per share of Class A common stock - diluted		0.27		(0.61)		(0.34)

3

As a result of the discovery of this error, on July 19, 2019, the audit committee (the “Audit Committee”) of the board of directors of the Company, after discussions with senior management of the Company, concluded that the consolidated financial statements for the Restated Periods, should not be relied upon. Based on that conclusion, management has determined that a material weakness in internal controls existed during the Restated Periods pertaining to the Company’s accounting for its changes in membership interests in Solaris LLC and the related deferred tax impacts thereof. Accordingly, our disclosure controls and procedures and internal control over financial reporting for the Restated Periods were not effective and management, with the oversight of the Audit Committee, intends to promptly develop a plan to remediate the material weakness.

The Company intends to amend its Form 10-K for the year ended December 31, 2018, and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, as soon as reasonably practicable.

The Audit Committee and senior management have discussed the foregoing matters with BDO USA, LLP, the Company’s independent registered public accounting firm (“BDO”).

Item 9.01Financial Statements and Exhibits.

(d)Exhibits.

Exhibit Number	Description
99.1	Solaris Oilfield Infrastructure, Inc. press release dated July 19, 2019.

Cautionary Note to Investors—This Current Report on Form 8-K contains forward-looking statements. Solaris Oilfield Infrastructure, Inc. believes that its expectations are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the expectations expressed in this filing. These factors include statements regarding materiality or significance, the quantitative or qualitative effects of the restated financial statements, and any anticipated conclusions of the Audit Committee or management with respect to the matters relating to Solaris Oilfield Infrastructure, Inc.’s accounting, and the other factors described in the “Risk Factors” section of Solaris Oilfield Infrastructure, Inc.’s most recent Form 10-K and Forms 10-Q filed with the Securities and Exchange Commission and in its other public filings and press releases. Solaris Oilfield Infrastructure, Inc. undertakes no obligation to publicly update or revise any forward-looking statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 19, 2019 

SOLARIS OILFIELD INFRASTRUCTURE, INC.
By:	/s/ KYLE S. RAMACHANDRAN
Name:	Kyle S. Ramachandran
Title:	President and Chief Financial Officer

5

EX-99.1

Exhibit 99.1

Solaris Oilfield Infrastructure Announces Preliminary Second Quarter 2019 Financial and Operational Results 

HOUSTON, July 19, 2019 (BUSINESS WIRE) — Solaris Oilfield Infrastructure, Inc. (NYSE:SOI) (“Solaris” or the “Company”), a leading independent provider of supply chain management and logistics solutions designed to drive efficiencies and reduce costs for the oil and natural gas industry, today reported preliminary financial and operating results for the second quarter 2019 in conjunction with a restatement of certain balance sheet accounts for the reporting periods ended December 31, 2018 and 2017 and March 31, 2019, as well as the provision for income taxes in the year ended December 31, 2017. The restatement was technically required under generally accepted accounting principles and had no impact on the calculations of EBITDA or Adjusted EBITDA, or on the Net cash from operating activities and Net cash used in investing activities on the Consolidated Statement of Operations or Cash Flows for any of the restated periods. Additional detail is available on the Company’s Current Report on Form 8-K filed today.

Preliminary and Unaudited Second Quarter 2019 Financial and Operating Results

· Fully utilized mobile proppant management systems averaged 123 systems

· Total revenue expected to be approximately $63-65 million

· Total operating expenses expected to be approximately $36-37 million, including depreciation and amortization expense of $6.5 million and salaries, benefits and payroll taxes and selling, general and administrative expenses of approximately $5 million, including approximately $1 million of non-cash stock-based compensation expense

· Cash balance of approximately $30 million and no debt outstanding at June 30, 2019

Note: These preliminary and unaudited results are subject to the completion of the customary quarter-end closing and review process.

“Our second quarter performance is a direct result of our focus on operational excellence and continued innovation to drive additional savings, efficiencies and safety for our customers. During the second quarter, we averaged 123 proppant systems on a fully utilized basis, which was slightly above the expectations we set on our last call and reflected the addition of roughly 9 mobile proppant systems despite a relatively flat frac market backdrop.” Solaris’ Chairman and Chief Executive Officer Bill Zartler commented. “I’m also pleased that our team’s execution combined with our internal operational efficiency and conservative balance sheet has led to another quarter of significant free cash flow generation that resulted in a cash balance of approximately $30 million at quarter end, after distributing approximately $5 million in dividends to shareholders.”

Full Earnings Release and Conference Call Information

The Company will host a conference call to discuss its second quarter 2019 results on Wednesday, July 31, 2019 at 7:30 a.m. Central Time (8:30 a.m. Eastern Time). Solaris will issue its second quarter 2019 earnings release after market close on July 30, 2019.

To join the second quarter 2019 conference call from within the United States, participants may dial (844) 413-3978. To join the conference call from outside of the United States, participants may dial (412) 317-6594. When instructed, please ask the operator to be joined to the Solaris Oilfield Infrastructure, Inc. call. Participants are encouraged to log in to the webcast or dial in to the conference call approximately ten minutes prior to the start time. To listen via live webcast, please visit the Investor Relations section of the Company’s website, www.solarisoilfield.com.

An audio replay of the conference call will be available shortly after the conclusion of the call and will remain available for approximately seven days. It can be accessed by dialing (877) 344-7529 within the United States or (412) 317-0088 outside of the United States. The conference call replay access code is 10132232. The replay will also be available in the Investor Relations section of the Company’s website shortly after the conclusion of the call and will remain available for approximately seven days.

About Solaris Oilfield Infrastructure, Inc.

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

Website Disclosure

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

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

Forward Looking Statements

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

Contacts:

Yvonne Fletcher

Senior Vice President, Finance and Investor Relations

(281) 501-3070

IR@solarisoilfield.com