Solaris Oilfield Infrastructure (SOI) Q4 Results - Feb 19

[dan_s]

Solaris Oilfield Infrastructure Announces Fourth Quarter and Full Year 2019 Results
February 18, 2020

Fourth Quarter and Full Year 2019 Highlights

Net income of $90.4 million, or $1.69 per diluted Class A share, for the full year ended December 31, 2019; adjusted pro forma net income of $62.7 million, or $1.32 per diluted share for the year ended December 31, 2019 (see below for a reconciliation of adjusted pro forma net income to net income attributable to Solaris)

Net income of $25.3 million, or $0.48 per diluted Class A share, for the quarter ended December 31, 2019; Adjusted pro forma net income of $9.7 million, or $0.20 per diluted share for the quarter ended December 31, 2019 < Compares to my forecast of $0.19 EPS for Q4.

Adjusted EBITDA of $112.9 million and $20.9 million for the year and quarter ended December 31, 2019, respectively

Net cash provided by operating activities of $114.9 million and $26.3 million for the year and quarter ended December 31, 2019, respectively < Compares to my Q4 operating cash flow forecast of $20.9 million ($0.67/share).

Positive free cash flow of $80.0 million and $24.4 million for the year and quarter ended December 31, 2019, respectively < Solaris is now a cash flow machine. The can quickly adjust their capital expenditures to demand for their equipment. Living within cash flow is no problem for this small-cap.

Raised the regular quarterly dividend 5% in December 2019 and paid the new regular quarterly dividend of $0.105 per share on December 26, 2019

Announced a $25 million share repurchase program in December 2019 of which approximately $3.3 million was spent in 2019 to repurchase approximately 0.3 million shares; an additional $14.4 million spent in 2020 to purchase an additional 1.2 million shares through February 14, 2020, leaving approximately $7.3 million of repurchase authorization.

Super Strong Balance Sheet: "As of December 31, 2019, the Company had approximately $66.9 million of cash on the balance sheet, which reflects over $1.40 per fully diluted share of available cash. The Company’s $50.0 million credit facility remains undrawn."

My updated forecast/valuation model will be posted to the EPG website this afternoon. My valuation has increased.

[dan_s]

Stife's Update:

Solaris Oilfield Infrastructure, Inc. (SOI, $13.48, Buy; Target $16.00)

- Strong Finish to 2019 for SOI; FCF Generation and Shareholder Returns in Focus; Maintain Buy - Stephen Gengaro

- We believe Solaris is well positioned to continue to generate strong FCF, fund its dividend and utilize excess cash to repurchase shares while maintaining a debt-free balance sheet despite current industry headwinds. Based on our lower 2020-21 EBITDA forecasts, we expect SOI to generate FCF of $55.2 million and $62.0 million in FCF in 2020-21, respectively, representing FCF yields of 8.6% and 9.7%, respectively. We maintain our Buy rating and $16 target price based on 6.0x our 2021 EBITDA forecast, supported by a 7.0% and 8.0% FCF yield for 2020-21 FCF projections, respectively.