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What changed in Solaris Energy Infrastructure, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Solaris Energy Infrastructure, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+404 added−314 removedSource: 10-K (2025-03-05) vs 10-K (2024-02-27)

Top changes in Solaris Energy Infrastructure, Inc.'s 2024 10-K

404 paragraphs added · 314 removed · 192 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

61 edited+44 added−53 removed47 unchanged
Biggest changeTo protect our employees, contractors, and surrounding community from workplace hazards and risks, we implement and maintain an integrated system of policies, practices, and controls, including requirements to complete detailed safety and regulatory compliance training on a regularly scheduled basis for all applicable individuals. ​ 6 Table of Contents Recruiting In order to recruit and maintain a workforce that is talented and qualified, we have personnel devoted to recruiting and retention, online job postings and recruiting programs, such as job fairs and other recruiting events, which we have established at academic and professional institutions for roles at all levels.
Biggest changeTo protect our employees, contractors, and surrounding community from workplace hazards and risks, we implement and maintain an integrated system of policies, practices, and controls, including requirements to complete detailed safety and regulatory compliance training on a regularly scheduled basis for all applicable individuals.
Walker has served as the Chief Operating Officer of Encino Energy, a private oil and gas acquisition and development company, since September 2018. Mr. Walker retired as executive vice president and chief operating officer of Range Resources Corporation (“Range Resources”) (NYSE: RRC) in April 2018.
Walker has served as the Chief Operating Officer of Encino Energy, a private oil and gas acquisition and development company, since September 2018. Mr. Walker retired as executive vice president and chief operating officer of Range Resources Corporation (NYSE: RRC) (“Range Resources”) in April 2018.
The more significant of these existing environmental and occupational health and safety laws and regulations include the following U.S. legal standards, as amended from time to time: (1) the Clean Air Act (“CAA”), which restricts the emission of air pollutants from many sources and imposes various pre-construction, operational, monitoring, and reporting requirements, and that the EPA has relied upon as authority for adopting climate change regulatory initiatives relating to greenhouse gas (“GHG”) emissions; (2) the Federal Water Pollution Control Act, also known as the Clean Water Act, which regulates discharges of pollutants from facilities to state and federal waters, including wetlands, and establishes the extent to which waterways are subject to federal jurisdiction and rulemaking as protected waters of the United States; (3) the Oil Pollution Act of 1990, which, among other things, subjects owners and operators of onshore facilities to liability for removal costs and damages arising from an oil spill in waters of the United States; (4) the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), which imposes liability on generators, transporters, disposers and arrangers of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur; (5) the Resource Conservation and Recovery Act (“RCRA”), which governs the generation, treatment, storage, transport, and disposal of solid wastes, including hazardous wastes; (6) the Safe Drinking Water Act (“SDWA”), which ensures the quality of the nation’s public drinking water through adoption of drinking water standards and controlling the injection of waste fluids into below-ground formations that may adversely affect drinking water sources; (7) the Occupational Safety and Health Act, which establishes workplace standards for the protection of the health and safety of employees, including the implementation of hazard communications programs designed to inform employees about hazardous substances in the workplace, potential harmful effects of these substances, and appropriate control measures; (8) the Endangered Species Act, which restricts activities that may affect existing or previously unidentified federally listed endangered and threatened species or their habitats by the implementation of new or existing operating restrictions or a temporary, seasonal, or permanent ban in affected areas; and 7 Table of Contents (9) the U.S.
The more significant of these existing environmental and occupational health and safety laws and regulations include the following U.S. legal standards, as amended from time to time: (1) the Clean Air Act (“CAA”), which restricts the emission of air pollutants from many sources and imposes various pre-construction, operational, monitoring, and reporting requirements, and that the EPA has relied upon as authority for adopting climate change regulatory initiatives relating to greenhouse gas (“GHG”) emissions; (2) the Federal Water Pollution Control Act, also known as the Clean Water Act (“CWA”), which regulates discharges of pollutants from facilities to state and federal waters, including wetlands, and establishes the 9 Table of Contents extent to which waterways are subject to federal jurisdiction and rulemaking as protected waters of the United States; (3) the Oil Pollution Act of 1990, which, among other things, subjects owners and operators of onshore facilities to liability for removal costs and damages arising from an oil spill in waters of the United States; (4) the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), which imposes liability on generators, transporters, disposers and arrangers of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur; (5) the Resource Conservation and Recovery Act (“RCRA”), which governs the generation, treatment, storage, transport, and disposal of solid wastes, including hazardous wastes; (6) the Safe Drinking Water Act (“SDWA”), which ensures the quality of the nation’s public drinking water through adoption of drinking water standards and controlling the injection of waste fluids into below-ground formations that may adversely affect drinking water sources; (7) the Occupational Safety and Health Act, which establishes workplace standards for the protection of the health and safety of employees, including the implementation of hazard communications programs designed to inform employees about hazardous substances in the workplace, potential harmful effects of these substances, and appropriate control measures; (8) the Endangered Species Act, which restricts activities that may affect existing or previously unidentified federally listed endangered and threatened species or their habitats by the implementation of new or existing operating restrictions or a temporary, seasonal, or permanent ban in affected areas; and (9) the U.S.
Litigation risks are also increasing, as a number of states, municipalities and other plaintiffs have sought to bring suit against the largest oil and natural gas exploration and production companies in state or federal court, alleging, among other things, that such companies created public nuisances by producing fuels that contributed to global warming effects and therefore are responsible for roadway and infrastructure damages as a result, or alleging that the companies have been aware of the adverse effects of climate change for some time but defrauded their investors by failing to adequately disclose those impacts.
Climate-related litigation risks are also increasing, as a number of states, municipalities and other plaintiffs have sought to bring suit against the largest oil and natural gas exploration and production companies in state or federal court, alleging, among other things, that such companies created public nuisances by producing fuels that contributed to global warming effects and therefore are responsible for roadway and infrastructure damages as a result, or that the companies have been aware of the adverse effects of climate change for some time but defrauded their investors by failing to adequately disclose those impacts.
These laws and regulations may, among other things, require the acquisition of permits to conduct regulated activities; restrict the types, quantities and concentration of various substances that can be released into the environment; require remedial measures to mitigate pollution from former and ongoing operations; impose specific safety and health criteria addressing worker protection; and impose substantial liabilities for pollution resulting from operations and support services.
These laws and regulations may also, among other things, require the acquisition of permits to conduct regulated activities; restrict the types, quantities and concentration of various substances that can be released into the environment; require remedial measures to mitigate pollution from former and ongoing operations; impose specific safety and health criteria addressing worker protection; and impose substantial liabilities for pollution resulting from operations and support services.
(“ARIS”) (NYSE: ARIS), a role he has held since its initial public offering in October 2021, and previously served as Chairman and Chief Executive Officer of the predecessor to ARIS from its inception in 2014 through its initial public offering in October 2021. Mr. Zartler has extensive experience in both energy industry investing and managing growth businesses.
(NYSE: ARIS), a role he has held since its initial public offering in October 2021, and previously served as Chairman and Chief Executive Officer of the predecessor to ARIS from its inception in 2014 through its initial public offering in October 2021. Mr. Zartler has extensive experience in both energy industry investing and managing growth businesses.
From 2007 to June 2013, Ms. Durrett was the Director of Business Planning and Capital Projects for Cadre Proppants. Ms. Durrett previously served as Managing Director of Dynegy Midstream Services, where she provided leadership to several sectors of the organization including information technology, regulated energy delivery, natural gas liquids and midstream. Ms.
From 2007 to June 2013, Ms. Durrett was the Director of Business Planning and Capital Projects for Cadre Proppants. Ms. Durrett previously served as Managing Director of Dynegy Midstream Services (“Dynegy”), where she provided leadership to several sectors of the organization including information technology, regulated energy delivery, natural gas liquids and midstream. Ms.
State implementation of the revised NAAQS could, among other things, require installation of new emission controls on some of our or our customers' equipment, result in longer permitting timelines, and significantly increase our or our customers' capital expenditures and operating costs. (4) Climate Change .
State implementation of revised NAAQS could, among other things, require installation of new emission controls on some of our or our customers' equipment, result in longer permitting timelines, and significantly increase our or our customers' capital expenditures and operating costs. (4) Climate Change .
Our customers' access to water to be used in these processes may be adversely affected due to reasons such as periods of extended drought, private, third party competition for water in localized areas or the implementation of local or state governmental programs to monitor or restrict the beneficial use of water subject to their jurisdiction for hydraulic fracturing to assure adequate local water supplies.
Our customers' access to water to be used in these processes may be adversely affected due to reasons such as periods of extended drought, private, third party competition for water in localized areas or the implementation of local or state governmental programs to monitor or restrict the beneficial use of water subject to their jurisdiction for hydraulic fracturing to ensure adequate local water supplies.
The trend in environmental regulation is to place more restrictions and limitations on activities that may affect the environment and we or our customers may be required to make significant, unanticipated capital and operating expenditures. Examples of regulatory initiatives to which we are subject to include the following: (1) Hydraulic Fracturing .
The trend in environmental regulation is to place more restrictions and limitations on activities that may affect the environment or public health and we or our customers may be required to make significant, unanticipated capital and operating expenditures. Examples of regulatory initiatives to which we are subject to include the following: (1) Hydraulic Fracturing .
Our issued patents expire between 2032 and 2043, provided all of the maintenance fees are paid. We cannot make any assurances that any of our currently pending patent applications will result in the issuance of a granted patent, or whether the examination process will require us to narrow the present claims.
Our issued patents expire between 2032 and 2044, provided all of the maintenance fees are paid. We cannot make any assurances that any of our currently pending patent applications will result in the issuance of a granted patent, or whether the examination process will require us to narrow the present claims.
Kyle S. Ramachandran joined Solaris at its founding in 2014, was named Chief Financial Officer in 2017 and President in 2018. Prior to joining Solaris, Mr. Ramachandran was a member of the Barra Energia management team, an independent exploration and production company based in Rio de Janeiro, Brazil. Mr.
Ramachandran joined Solaris at its founding in 2014, was named Chief Financial Officer in 2017 and President in 2018. Prior to joining Solaris, Mr. Ramachandran was a member of the Barra Energia management team, an independent exploration and production company based in Rio de Janeiro, Brazil. Mr.
Seasonality Our business is not significantly impacted by seasonality, although our business may be impacted by holidays, inclement weather, and our clients’ budget cycles, during which we may experience declines in our operating results. For a discussion of the impact of weather on our operations, please see Item 1A.
Seasonality Our business is not significantly impacted by seasonality, although our business may be impacted by holidays, inclement weather, and our clients’ budget cycles, during which we may experience declines in our operating results. For a discussion of the impact of weather on our operations, please see Part I, Item 1A.
Finally, increasing concentrations of GHG in the earth's atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods, rising sea levels and other climatic events, as well as chronic shifts in temperature and precipitation patterns.
Finally, increasing concentrations of GHGs in the earth's atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods, rising sea levels and other climatic events, as well as chronic shifts in temperature and precipitation patterns.
The actual or perceived health risks of handling hydraulic fracture sand could materially and adversely affect hydraulic fracturing service providers, including us, through reduced use of hydraulic fracture sand, the threat of product liability or the filing of lawsuits naming us as a defendant, increased scrutiny by federal, state and local regulatory authorities of us and our customers or reduced financing sources available to the hydraulic fracturing industry.
The actual or perceived health risks of handling hydraulic fracture sand could materially and adversely affect hydraulic fracturing service providers, including us, 12 Table of Contents through reduced use of hydraulic fracture sand, the threat of product liability or the filing of lawsuits naming us as a defendant, increased scrutiny by federal, state and local regulatory authorities of us and our customers or reduced financing sources available to the hydraulic fracturing industry.
Parker has been a private investor since 1984. Mr. Parker served as a director of Carrizo Oil & Gas, Inc. (“Carrizo”) (NASDAQ: CRZO), including Chairman of its Audit Committee and as Lead Independent Director, from 2000 until 2019 when Carrizowas sold to Callon Petroleum Company (NYSE: CPE). Mr.
Parker has been a private investor since 1984. Mr. Parker served as a director of Carrizo Oil & Gas, Inc. (“Carrizo”) (NASDAQ: CRZO), including Chairman of its Audit Committee and as Lead Independent Director, from 2000 until 2019 when the Company was sold to Callon Petroleum Company (NYSE: CPE). Mr.
These climatic developments have the potential to cause physical damage to our assets and thus could have an adverse effect on our exploration and production operations. Additionally, changing meteorological conditions, particularly temperature, may result in changes to the amount, timing, or location of demand for energy or our production.
These climatic developments have the potential to cause physical damage to our assets or those of our customers, and thus could have an adverse effect on our operations. Additionally, changing meteorological conditions, particularly temperature, may result in changes to the amount, timing, or location of demand for energy production.
The OSHA’s hazard communication standard, the EPA’s Emergency Planning and Community Right-to-Know Act and comparable state regulations and any implementing regulations require that we organize and/or disclose information about hazardous materials used or produced in our operations and that this information be provided to employees, state and local governmental authorities and citizens.
OSHA’s hazard communication standard, the EPA’s Emergency Planning and Community Right-to-Know Act and Risk Management Plan requirements, and comparable state regulations and any implementing regulations require that we organize and/or disclose information about hazardous materials used or produced in our operations and that this information be provided to employees, state and local governmental authorities and citizens.
Our principal executive offices are located at 9651 Katy Freeway, Suite 300, Houston, Texas 77024, and our telephone number is (281) 501-3070. Our website is at www.solarisoilfield.com.
Our principal executive offices are located at 9651 Katy Freeway, Suite 300, Houston, Texas 77024, and our telephone number is (281) 501-3070. Our website is at www.solaris-energy.com.
Burke holds a Bachelor of Science in Electrical Engineering from University College, Dublin, Ireland, and a Master of Business Administration from Harvard University. 13 Table of Contents Cynthia M. Durrett , 59, has served as a member of the Board since March 2019 and as our Chief Administrative Officer since March 2017. Ms.
Mr. 14 Table of Contents Burke holds a Bachelor of Science in Electrical Engineering from University College, Dublin, Ireland, and a Master of Business Administration from Harvard University. Cynthia M. Durrett , 60, has served as a member of the Board since March 2019 and as our Chief Administrative Officer since March 2017. Ms.
Walker is a petroleum engineer with more than 43 years of oil and gas operations and management experience having previously been employed by Halliburton Company (NYSE: HAL) in various technical and management roles, Union Pacific Resources Group, Inc. and several private companies in which Mr. Walker served as an officer. Mr.
Walker is a petroleum engineer with more than 43 years of oil and gas operations and management experience having previously been employed by Halliburton in various technical and management roles, Union Pacific Resources and several private companies in which Mr. Walker served as an officer. Mr.
Burke served on the board of Centurion, a private equity sponsored oilfield services company based in Aberdeen, Scotland. Mr. Burke served as the Chief Executive Officer and President of Forum Energy Technologies (“Forum”) from May 2005 to October 2007 and as Chairman of Forum from 2007 to 2010. Mr.
From July 2013 to January 2018 Mr. Burke has served on the board of Centurion, a private equity sponsored oilfield services company based in Aberdeen, Scotland. Mr. Burke served as the Chief Executive Officer and President of Forum Energy Technologies (“Forum”) from May 2005 to October 2007 and as Chairman of Forum from 2007 to 2010. Mr.
(“Weatherford”) from January 1991 to August 1999, including Executive Vice President responsible for all manufacturing operations and engineering at its Compressor Division. Prior to joining Weatherford, Mr. Burke was employed by Cameron Iron Works (“Cameron”) from 1967 to 1989, where he held positions of increasing seniority, including Vice President of Cameron’s Ball Valve division. Mr.
Burke held various positions with Weatherford International Ltd. from January 1991 to August 1999, including Executive Vice President responsible for all manufacturing operations and engineering at its Compressor Division. Prior to joining Weatherford, Mr. Burke was employed by Cameron Iron Works from 1967 to 1989, where he held positions of increasing seniority, including Vice President of Cameron’s Ball Valve division.
Burke retired from his position as Chairman of Forum in 2010, subsequent to which he evaluated potential opportunities prior to becoming a director of Centurion. Prior to joining Forum, Mr. Burke served as Chief Executive Officer of Access Oil Tools Inc. (“Access”) from April 2000 to May 2005. Before joining Access, Mr. Burke held various positions with Weatherford International Ltd.
Burke retired from his position as Chairman of Forum in 2010, subsequent to which he evaluated potential opportunities prior to becoming a director of Centurion. Prior to joining Forum, Mr. Burke served as Chief Executive Officer of Access Oil Tools Inc. (“Access”) from April 2000 to May 2005. Before joining Access, Mr.
Prior to 1997 he spent 22 years with Dow Inc. (NYSE: DOW) in various roles including Vice President, Hydrocarbon Feedstocks. Ray N. Walker, Jr. , 66, Ray N. Walker, Jr. has served as a member of the Board since August 2018 and currently serves on our Compensation Committee. Mr.
Prior to 1997 he spent 22 years with Dow Chemical in various roles including Vice President, Hydrocarbon Feedstocks. Ray N. Walker, Jr. , 67, has served as a member of the Board since August 2018 and currently services on our Compensation Committee. Mr.
Over the years, he has advised a number of clients in accounting and financial matters, capital raising, international expansions and in dealings with the SEC. While working with companies in a variety of industries, his primary focus has been energy and manufacturing clients. Mr.
Over the years, he has advised a number of clients in accounting and financial matters, capital raising, international expansions and in dealings with the SEC. While working with companies in a variety of industries, his primary focus has been energy and manufacturing clients. Mr. Giesinger is a Certified Public Accountant in the State of Texas.
We design and manufacture specialized equipment, which combined with field technician support, last mile and mobilization logistics services and our software solutions, enables us to provide a service offering that helps oil and natural gas operators and their suppliers drive efficiencies that reduce operational footprint and costs during the completion phase of well development.
Solaris Logistics Solutions designs and manufactures specialized equipment, which combined with field technician support, last mile and mobilization logistics services and software solutions, enables the Company to provide a service offering that helps oil and natural gas operators and their suppliers drive efficiencies that reduce operational footprint and costs during the completion phase of well development.
We believe that the principal competitive factors in the markets we serve are equipment reliability, technical expertise, patent-protected technology, ability to offer unique and/or bundled services offerings, equipment capacity, transportation and storage, work force competency, efficiency, safety record, reputation, experience and price.
For both business segments, we believe that the principal competitive factors in the markets we serve are equipment reliability, technical expertise, patent-protected technology (for Solaris Logistics Solutions), ability to offer unique and/or bundled services offerings, equipment capacity, work force competency, efficiency, safety record, reputation, experience and price.
As of December 31, 2023, we had seven issued patents in the United States, nine corollary patents issued in Canada and two corollary patents issued in Mexico; four pending utility patent applications in the United States, none in Canada, and two in Mexico. Each patent and patent application relates to our systems, services and other technologies.
As of December 31, 2024, we had eleven issued patents in the United States, nine corollary patents issued in Canada and three corollary patents issued in Mexico; one pending utility patent application in the United States, one in Canada, and two in Mexico. Each patent and patent application relates to our systems, services and other technologies.
Another consequence of seismic events may be lawsuits alleging that disposal well operations have caused damage to neighboring properties or otherwise violated state and federal rules regulating waste disposal. 8 Table of Contents (3) Ground-Level Ozone Standards .
Another consequence of seismic events may be lawsuits alleging that disposal well operations have caused damage to neighboring properties or otherwise violated state and federal rules regulating waste disposal. (3) National Ambient Air Quality Standards .
Mr. Zartler served as our predecessor’s Chief Executive Officer and Chairman from October 2014 through our IPO in May 2017. Mr. Zartler also currently serves as Executive Chairman of Aris Water Solutions, Inc.
Zartler founded Loadcraft Site Services, LLC and served as its Executive Chairman from February 2014 to September 2014. Mr. Zartler served as our predecessor’s Chief Executive Officer and Chairman from October 2014 through our IPO in May 2017. Mr. Zartler also currently serves as Executive Chairman of Aris Water Solutions, Inc.
Powell was named our Chief Legal Officer and Corporate Secretary in August 2017. From 2009 to August 2017, Mr. Powell served in various roles of responsibility, including Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer for CARBO Ceramics Inc., a leading technology and services company providing products and services to the global oil and gas and industrial markets.
Powell served in various roles of responsibility, including Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer for CARBO Ceramics Inc., a leading technology and services company providing products and services to the global oil and gas and industrial markets. Prior thereto, Mr. Powell served in various legal roles at Baker Hughes Incorporated. Mr.
Prior thereto, Mr. Powell served in various legal roles at Baker Hughes Incorporated. Mr. Powell began his career with the international law firm of Norton Rose Fulbright (formerly Fulbright & Jaworski L.L.P.). Mr. Powell obtained his Doctor of Jurisprudence from the University of Houston Law Center, where he graduated magna cum laude. Mr.
Powell began his career with the international law firm of Norton Rose Fulbright (formerly Fulbright & Jaworski L.L.P.). Mr. Powell obtained his Doctor of Jurisprudence from the University of Houston Law Center, where he graduated magna cum laude. Mr.
Zartler , 58, is our Chairman and has served as a member of the Board since February 2017 and a manager of our predecessor since October 2014. Mr. Zartler was also appointed Chief Executive Officer by the Board in July 2018. Mr. Zartler founded Loadcraft Site Services, LLC and served as its Executive Chairman from February 2014 to September 2014.
William A. Zartler , 59, is our Chairman and has served as a member of the Board since February 2017 and a manager of our predecessor since October 2014. Mr. Zartler was also appointed Chief Executive Officer by the Board in July 2018. Mr.
Teague has served as the Co-Chief Executive Officer of Enterprise Products Holdings LLC (“Enterprise”) since January 2020, has been a Director of Enterprise since July 2008 and serves as Co-Chairman of the Capital Projects Committee of Enterprise since November 2016. Mr.
Teague has served as the Chief Executive Officer of Enterprise Products Holdings LLC since January 2016 and has been a Director of Enterprise Products Holdings LLC since July 2008. Mr.
Parker is board certified by the NACD, where he serves as a NACD Board Leadership Fellow. 14 Table of Contents A. James Teague , 79, A. James Teague has served as a member of the Board since May 2017 and currently serves on our Audit and Compensation Committees. Mr.
Parker is board certified by the NACD, where he serves as a NACD Board Leadership Fellow. A. James Teague , 79, A. has served as a member of the Board since May 2017. Mr.
Teague previously served as the Chief Executive Officer of Enterprise from January 2016 to January 2020, Chief Operating Officer of Enterprise from November 2010 to December 2015 and served as an Executive Vice President of Enterprise from November 2010 until February 2013. Mr.
Teague previously served as the Chief Operating Officer of Enterprise 15 Table of Contents Products Holdings LLC from November 2010 to December 2015 and served as an Executive Vice President of Enterprise Products Holdings LLC (“Enterprise”) from November 2010 until February 2013. Mr.
Giesinger has served on the board of directors of Geospace Technologies Corporation (NASDAQ: GEOS), a publicly traded company primarily involved in the design and manufacture of instruments and equipment utilized in oil and gas industries. Mr.
Giesinger has served on the board of directors of Geospace Technologies Corporation (NASDAQ: GEOS), a publicly traded company primarily involved in the design and manufacture of instruments and equipment utilized in oil and gas industries. Mr. Giesinger also serves as director and audit committee member on the board of Mach Natural Resources LP (NYSE: MNR) Mr.
We consider our employee relations to be good. We continually strive to attract and retain talented individuals. Our employee demographic profile aids us in promoting inclusion of thought, skill, knowledge, and culture across our operations to drive enhanced decision making and execution for the business.
We consider our employee relations to be good. We continually strive to attract and retain talented individuals. Our commitment to equal employment opportunity principles and developing an employee population that brings varied perspectives to the workplace aids us in promoting a culture of thought, skill and knowledge across our operations to drive enhanced decision-making and execution for the business.
Some of these companies could be customers of ours on certain jobs while also utilizing their own equipment and integrated service offerings on other jobs.
We have numerous types of competitors, including logistics companies, equipment manufacturers, hydraulic fracturing service companies and sand mining companies. Some of these companies could be customers of ours on certain jobs while also utilizing their own equipment and integrated service offerings on other jobs.
Giesinger , 67, has served as a member of the Board since May 2017 and currently serves on our Nominating & Governance Committee and as Chairman of our Audit Committee. Mr. Giesinger retired as a managing partner from KPMG LLP in 2015. Since November 2015, Mr.
Giesinger , 68, has served as a member of the Board since May 2017. Mr. Giesinger retired as a managing partner from KPMG LLP in 2015. Since November 2015, Mr.
Since 1997, he has been a Member of Yorktown Partners LLC, a private investment manager focused on the energy industry. From 1975 to 1997, he was in the Corporate Finance Department of Dillon, Read & Co. Inc. and active in the private equity and energy areas, including the founding of the first Yorktown Partners fund in 1991. Mr.
Keenan has over 45 years of experience in the financial and energy businesses. Since 1997, he has been a Member of Yorktown Partners LLC, a private investment manager focused on the energy industry. From 1975 to 1997, he was in the Corporate Finance Department of Dillon, Read & Co.
Ms. Argo has over 25 years of experience in the energy industry and maintains multiple organizational memberships including the National Association of Corporate Directors (“NACD”).. James R.
Ms. Argo has over 25 years of experience in the energy industry and maintains multiple organizational memberships including the National Association of Corporate Directors (“NACD”). James R. Burke , 87, has served as a member of the Board since May 2017 and served as a manager of our predecessor from October 2014 to May 2017.
Walker holds a Bachelor of Science degree in Agricultural Engineering with honors from Texas A&M University. Set forth below are the name, age, position and description of the business experience of our executive officers (other than those who are also Directors and included above) as of February 27, 2024. Kyle S. Ramachandran, 39 – President and Chief Financial Officer.
Set forth below are the name, age, position and description of the business experience of our executive officers (other than those who are also Directors and included above) as of March 5, 2025. Kyle S. Ramachandran, 40 – President and Chief Financial Officer. Kyle S.
Keenan holds a Bachelor of Arts degree cum laude from Harvard College and a Master of Business Administration degree from Harvard University. F. Gardner Parker , 82, F. Gardner Parker has served as a member of the Board since May 2017 and currently serves on our Audit Committee and as Chairman of our Compensation Committee. Mr.
In addition, he is serving or has served as a director of multiple Yorktown Partners portfolio companies. Mr. Keenan holds a Bachelor of Arts degree cum laude from Harvard College and a Master of Business Administration degree from Harvard University. F. Gardner Parker , 83, has served as a member of the Board since May 2017. Mr.
Wirtz was named our Chief Accounting Officer in June 2023. Prior to joining Solaris, Christopher served as the Controller, Proppant Segment for ProFrac Holding Corp. from December 2022 to May 2023. During that time, the Proppant Segment grew from two sand mines to eight, largely through acquisitions.
Ramachandran is a member of the Board of Regents of Boston College. Christopher P. Wirtz, 51 – Chief Accounting Officer. Christopher P. Wirtz was named our Chief Accounting Officer in June 2023. Prior to joining Solaris, Christopher served as the Controller, Proppant Segment for ProFrac Holding Corp. from December 2022 to May 2023.
His accounting experience spans both public and private companies within the energy industry for over 20 years. Christopher obtained his Bachelor of Business Administration degree in Accounting from the University of Louisiana at Lafayette and is a Certified Public Accountant. Christopher M. Powell, 49 – Chief Legal Officer and Corporate Secretary. Christopher M.
Christopher obtained his Bachelor of Business Administration degree in Accounting from the University of Louisiana at Lafayette and is a Certified Public Accountant. Christopher M. Powell, 50 – Chief Legal Officer and Corporate Secretary. Christopher M. Powell was named our Chief Legal Officer and Corporate Secretary in August 2017. From 2009 to August 2017, Mr.
At the federal level, the EPA has asserted federal regulatory authority under the SDWA over certain hydraulic fracturing activities involving the use of diesel fuels and published permitting guidance for such activities.
At the federal level, the EPA has asserted federal regulatory authority under the SDWA over certain hydraulic fracturing activities involving the use of diesel fuels and published permitting guidance for such activities. Additionally, the EPA issued a final regulation under the CWA prohibiting discharges to publicly owned treatment works of wastewater from onshore unconventional oil and gas extraction facilities.
Christopher joined ProFrac via its acquisition of US Well Services where he served as Corporate Controller from April 2017 to November 2020 and as VP of Internal Audit & Process Controls from September 2021 15 Table of Contents through November 2022. US Well Services was a provider of high-pressure, hydraulic fracturing services in US unconventional oil and natural gas basins.
During that time, the Proppant Segment grew from two sand mines to 16 Table of Contents eight, largely through acquisitions. Christopher joined ProFrac via its acquisition of US Well Services where he served as Corporate Controller from April 2017 to November 2020 and as VP of Internal Audit & Process Controls from September 2021 through November 2022.
While we believe that we will be able to make satisfactory alternative arrangements in the event of any interruption in the supply of third-party trucking services by one or more of our suppliers, we may not always be able to do so.
While we believe that we can make satisfactory alternative arrangements in the event of any interruption in the supply of third-party trucking services, there is no guarantee that we will be able to avoid shortages or price increases in the future.
We seek to identify qualified internal and external talent for our organization, enabling us to execute on our strategic objectives. As of December 31, 2023, we employed 338 employees overall, who were employed pursuant to an administrative services agreement that primarily supports our operations. None of our employees are subject to collective bargaining agreements.
We foster a collaborative and welcoming work environment, focused on working safely every day. We seek to identify qualified internal and external talent for our organization, enabling us to execute on our strategic objectives. As of December 31, 2024, we employed 364 employees overall. None of our employees are subject to collective bargaining agreements.
Keenan also serves on the boards of directors of the following public companies: Antero Resources Corporation (NYSE: AR), Antero Midstream Corporation (NYSE: AM) and Aris Water Solutions, Inc. (NYSE: ARIS). In addition, he is currently serving, and has previously served, as a director of multiple Yorktown Partners portfolio companies. Mr.
Inc. and active in the private equity and energy areas, including the founding of the first Yorktown Partners fund in 1991. Mr. Keenan also serves on the boards of directors of the following public companies: Antero Resources Corporation (NYSE: AR), Antero Midstream Corporation (NYSE: AM) and Aris Water Solutions, Inc. (NYSE: ARIS).
We cannot predict whether, or in what form, any legislative or regulatory changes or municipal ordinances applicable to our logistics operations will be enacted and to what extent any such legislation or regulations could increase our costs or otherwise adversely affect our business or operations. 11 Table of Contents Intellectual Property We continuously seek to innovate our product and service offerings to improve our operations and deliver increased value to our customers and our software team is constantly designing and building increased software capabilities to enable efficient supply chain planning and management for our customers.
We cannot predict whether, or in what form, any legislative or regulatory changes or municipal ordinances applicable to our logistics operations will be enacted and to what extent any such legislation or regulations could increase our costs or otherwise adversely affect our business or operations.
Information on our website or any other website is not incorporated by reference into this Annual Report and does not constitute a part of this Annual Report.
Information on our website or any other website is not incorporated by reference into this Annual Report and does not constitute a part of this Annual Report. ​ 13 Table of Contents Board of Directors and Executive Officers Set forth below are the name, age and business experience of the board of directors of the company as of March 5, 2025.
Suppliers We have built long-term relationships with third-party suppliers to both transport equipment and products and provide certain materials used in the manufacturing and maintenance of our systems. During the years ended December 31, 2023 and 2022, no supplier accounted for more than 10% of our total spending.
We have built long-term relationships with third-party suppliers for the transportation of equipment and products, as well as for the provision of materials used in the manufacturing and maintenance of our systems.
Howard Kennan, Jr. , 73, has served as a member of the Board since May 2017 and served as a manager of our predecessor from November 2014 to May 2017 and currently serves on our Nominating & Governance Committee. Mr. Keenan has over 45 years of experience in the financial and energy businesses.
He has lectured and led seminars on various topics dealing with financial risks, controls and financial reporting. W. Howard Kennan, Jr. , 74, has served as a member of the Board since May 2017 and served as a manager of our predecessor from November 2014 to May 2017. Mr.
Occupational Safety and Health Administration ("OSHA") and analogous state agencies, have the power to enforce compliance with these laws and regulations and the permits issued under them, often requiring difficult and costly actions, including the incurrence of potentially significant capital or operating expenditures to mitigate or prevent releases of materials from our equipment, facilities or from customer locations where we provide products and services.
We may be required to undertake difficult and costly actions, including as a result of any governmental enforcement actions, which could include the incurrence of potentially significant capital or operating expenditures to mitigate or prevent releases of materials from our equipment, facilities or from customer locations where we provide products and services.
Mr. Wirtz was also Chief Financial Officer for ADS Services, LLC, a privately held managed pressure drilling company, from November 2022 until September 2021. Prior to joining US Well Services, Christopher held management and senior level positions at BJ Services Company, Superior Energy Services, Ernst & Young, and Broussard, Poche, Lewis and Breaux.
US Well Services was a provider of high-pressure, hydraulic fracturing services in US unconventional oil and natural gas basins. Mr. Wirtz was also Chief Financial Officer for ADS Services, LLC, a privately held managed pressure drilling company, from November 2020 until September 2021.
Notwithstanding these legal developments, further administrative and regulatory restrictions may be adopted by the Biden Administration that could restrict hydraulic fracturing activities on federal lands and waters.
Notwithstanding these legal developments, new laws or regulations or administrative and policy initiatives could be adopted that have the effect of restricting hydraulic fracturing activities generally, or those occurring on federal lands.
“Risk Factors—Seasonal weather conditions and natural disasters could severely disrupt normal operations and harm our business.” Human Capital We believe that our employees are the foundation to fostering an innovative culture, the safe operation of our assets and delivery of services to our customers. We foster a collaborative and inclusive work environment, focused on working safely every day.
These risks may be self-insured or may not be fully covered under our insurance policies.” ​ 8 Table of Contents Human Capital We believe that our employees are the foundation to fostering an innovative culture, the safe operation of our assets and delivery of services to our customers.
The impacts of these orders, pledges, agreements and any legislation or regulation promulgated to fulfill the United States’ commitments under the Paris Agreement, COP26, COP28 or other international conventions cannot be predicted at this time.
At this time, the impact to our and our customers’ operations of President Trump’s withdrawal of the United States from the Paris Agreement and any subsequent or related actions with respect to international climate-related agreements cannot be predicted.
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Item 1. Business Our Company We are a Houston, Texas based business.
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Item 1. Business Our Company We provide mobile and scalable equipment-based solutions for use in distributed power generation as well as the management of raw materials used in the completion of oil and natural gas wells. Headquartered in Houston, Texas, Solaris serves multiple U.S. end markets, including energy, data centers, and other commercial and industrial sectors.
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We service most active oil and natural gas basins in the United States. We believe our continual innovation is one of our main competitive advantages. We specialize in developing all-electric equipment that automates the low pressure section of oil and gas well completion sites.
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Solaris delivers these offerings through its Solaris Power Solutions and Solaris Logistics Solutions business segments. Solaris Power Solutions, recently established following the acquisition of Mobile Energy Rentals LLC (“MER”), provides mobile power generation solutions through equipment lease arrangements. On September 11, 2024, Solaris, through its subsidiary Solaris LLC, completed the acquisition of MER.
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We believe all-electric equipment operates more efficiently than traditional equipment, is more reliable, safer and lowers the environmental and operating footprint required to develop oil and gas. We also believe that automation improves operational efficiency by reducing errors, waste and headcount required on well sites, which lowers costs and improves safety.
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MER operates throughout the United States, providing configurable sets of primarily natural gas-powered mobile turbines and ancillary equipment to energy, data center, and other commercial and industrial end-markets.
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We manage and report our operations as a single business. Our sand handling service offering has grown from utilizing our legacy mobile proppant management systems to multiple types of all-electric, automated systems designed to efficiently store, move and blend sand and fluids on the low pressure side of well completion sites.
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This acquisition provided Solaris entry into the large and growing distributed power solutions market, both enhancing our position as a mobile equipment and logistics solution provider to the oil and gas industry and also diversifying our end market exposure.
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We measure our activity based on the number of our fully utilized systems. Typically, one to several systems could follow one hydraulic fracturing (frac) crew. Our Properties ​ We own or lease various facilities including our corporate headquarters in Houston, Texas, a repair and maintenance facility in Monahans, Texas, and a manufacturing facility in Early, Texas.
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The Company services most active oil and natural gas basins in the United States. Our Properties ​ We own or lease various facilities, including our corporate headquarters in Houston, Texas, and the following segment-specific facilities: Solaris Power Solutions. Repair and maintenance facility in Buffalo, Texas; and Solaris Logistics Solutions.
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To date, we have been able to obtain the third party-trucking services necessary to support our operations on a timely basis.
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Repair and maintenance facility in Monahans, Texas, and a manufacturing facility in Early, Texas. Suppliers Solaris Power Solutions. As part of the MER Acquisition, we obtained access to a long-standing relationship with a leading supplier of distributed power generation equipment.
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We do not currently have long-term agreements with third-party trucking suppliers and could experience shortages and price increases in the future. Our Customers and Contracts Our primary customers are major E&P and oilfield service companies. We generally execute master service agreements ("MSAs") with our customers.
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For the period from September 11, 2024, the closing date of the acquisition, to December 31, 2024 this supplier accounted for 38% of our total consolidated spending for the year ended December 31, 2024.
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Generally, the MSAs govern the relationship with our customers with specific work performed under individual work orders. For the years ended December 31, 2023 and 2022, Liberty Oilfield Services, LLC accounted for approximately 12% and 22%, respectively, of our total revenue.
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While recent commercial dialogue with this supplier remains strong, as evidenced by our numerous significant purchase orders placed with this supplier since the MER Acquisition, there is risk that we may not be able to secure additional supply of power generation capacity in a timely or cost-effective manner.
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For the year ended December 31, 2023, EOG Resources, Inc. accounted for approximately 12% of our total revenue. 5 Table of Contents Competition The oil and natural gas services industry is highly competitive. We have numerous types of competitors, including logistics companies, equipment manufacturers, hydraulic fracturing service companies and sand mining companies.
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While we believe that viable market alternatives to this vendor exist, there is no guarantee that we would not be exposed to supply chain shortages or price increases in the future. Solaris Logistics Solutions.
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We are proud of the diversity of our workforce and the inclusion of our employees at all levels of our organization.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

75 edited+69 added−17 removed128 unchanged
Biggest changeOur costs to comply with existing or any new environmental or occupational health and safety laws, regulations and executive actions could impact us and our customers, increase the costs associated with our business or reduce demand for our services, any of which could have a material adverse effect on our business, results of operations and financial condition.
Biggest changeOur costs to comply with existing or any new environmental or occupational health and safety laws, regulations and executive actions could impact us and our customers, increase the costs associated with our business or reduce demand for our services, any of which could have a material adverse effect on our business, results of operations and financial condition. ​ 26 Table of Contents Our and our customers' operations are subject to a number of risks arising out of the threat of climate change, energy conservation measures or initiatives that stimulate demand for alternative forms of energy that could result in increased operating and capital costs for our customers and reduced demand for the products and services we provide.
Notwithstanding our election to pursue aspirational targets now or in the future, we may receive pressure from investors, lenders or other groups to adopt more aggressive climate or other ESG-related goals, but we cannot guarantee that we will be able to implement such goals because of potential costs or technical or operational obstacles.
Notwithstanding our election to pursue any aspirational targets now or in the future, we may receive pressure from investors, lenders or other groups to adopt more aggressive climate or other ESG-related goals, but we cannot guarantee that we will be able to pursue or implement such goals because of potential costs or technical or operational obstacles.
Additionally, any changes in employment, benefit plan, tax or labor laws or regulations or new regulations proposed from time to time, could have a material adverse effect on our employment practices, our business, financial condition, results of operations and cash available for distribution to our shareholders. ​ ​ ​ ​ 20 Table of Contents Unsatisfactory safety performance may negatively affect our customer relationships and, to the extent we fail to retain existing customers or attract new customers, adversely impact our revenues. ​ Our ability to retain existing customers and attract new business is dependent on many factors, including our ability to demonstrate that we can reliably and safely operate our business in a manner that is consistent with applicable laws, rules and permits, which legal requirements are subject to change.
Additionally, any changes in employment, benefit plan, tax or labor laws or regulations 23 Table of Contents or new regulations proposed from time to time, could have a material adverse effect on our employment practices, our business, financial condition, results of operations and cash available for distribution to our shareholders. ​ Unsatisfactory safety performance may negatively affect our customer relationships and, to the extent we fail to retain existing customers or attract new customers, adversely impact our revenues. ​ Our ability to retain existing customers and attract new business is dependent on many factors, including our ability to demonstrate that we can reliably and safely operate our business in a manner that is consistent with applicable laws, rules and permits, which legal requirements are subject to change.
While we may elect to seek out various voluntary ESG targets now or in the future, such targets are aspirational. We may not be able to meet such targets in the manner or on such a timeline as initially contemplated, including as a result of unforeseen costs or technical difficulties associated with achieving such results.
While we may elect to seek out various voluntary ESG targets now or in the future, such targets are often aspirational. We may not be able to meet such targets in the manner or on such a timeline as initially contemplated, including as a result of unforeseen costs or technical difficulties associated with achieving such results.
For additional information regarding the Tax Receivable Agreement, see Note 10. “Income Taxes” under Part II, Item 8. “Financial Statements and Supplementary Data.” In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits, if any, Solaris Inc. realizes in respect of the tax attributes subject to the Tax Receivable Agreement.
For additional information regarding the Tax Receivable Agreement, see Note 15. “Income Taxes” under Part II, Item 8. “Financial Statements and Supplementary Data.” In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits, if any, Solaris Inc. realizes in respect of the tax attributes subject to the Tax Receivable Agreement.
Our future results may be impacted by the uncertainty caused by an economic downturn, weak economic conditions and widespread financial distress, volatility or deterioration in the debt and equity capital markets, inflation, deflation or other adverse economic conditions that may negatively affect us or parties with whom we do business resulting in a reduction in our customers' spending and their non-payment or inability to perform obligations owed to us, such as the failure of customers to honor their commitments or the failure of major suppliers to complete orders.
Our future results may be impacted by the uncertainty caused by an economic downturn, weak economic conditions and widespread financial distress, volatility or deterioration in the debt and equity capital markets, inflation, deflation or other adverse economic conditions that may negatively affect us or parties with whom we do business resulting in a reduction in our customers' spending and their non-payment or inability to perform obligations owed to us, such as the 24 Table of Contents failure of customers to honor their commitments or the failure of major suppliers to complete orders.
These risks may be self-insured or may not be fully covered under our insurance policies. Our assets and operations may be affected by natural or man-made disasters and other external events such as extreme weather events associated with tornados, extreme periods of drought or otherwise that may disrupt our business, including manufacturing and field operations.
These risks may be self-insured or may not be fully covered under our insurance policies. Our assets and operations may be affected by natural or man-made disasters and other external events such as extreme weather events associated with tornados, extended periods of drought, wildfires, or otherwise that may disrupt our business, including manufacturing and field operations.
Disruption of transportation services due to factors outside of our control, including shortages of rail cars or trucks, insufficient available workforce or supply chain-provided commodities, increased costs associated with transportation services, extreme weather-related events, accidents, strikes, lockouts, increased regulation, more stringent railcar or safety regulatory initiatives, or other events could temporarily impair the ability of our customers to take delivery of our systems and proppant or chemicals at the well site or affect the provision of last mile 17 Table of Contents services.
Disruption of transportation services due to factors outside of our control, including shortages of rail cars or trucks, insufficient available workforce or supply chain-provided commodities, increased costs associated with transportation services, extreme weather-related events, accidents, strikes, lockouts, increased regulation, more stringent railcar or safety regulatory initiatives, or other events could temporarily impair the ability of our customers to take delivery of our systems and proppant or chemicals at the well site or affect the provision of last mile services.
Our principal stockholders collectively hold a significant amount of the voting power of our common stock. Holders of Class A common stock and Class B common stock vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law or our certificate of incorporation.
Our principal stockholders collectively hold a significant amount of the voting power of our common stock. Holders of Class A common stock and Class B common stock vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law or our certificate of incorporation. Yorktown, William A.
Accordingly, we believe that the exclusive forum provision would apply to actions arising under the Securities Act or the rules and regulations promulgated thereunder, except to the extent a particular action fell within the exception for covered class actions or the exception in the certificate of incorporation 27 Table of Contents described above otherwise applied to such action, which could occur if the action also involved claims under the Exchange Act.
Accordingly, we believe that the exclusive forum provision would apply to actions arising under the Securities Act or the rules and regulations promulgated thereunder, except to the extent a particular action fell within the exception for covered class actions or the exception in the certificate of incorporation described above otherwise applied to such action, which could occur if the action also involved claims under the Exchange Act.
To the extent that Solaris Inc. needs funds, including to make payments under the Tax Receivable Agreement, and Solaris LLC or its subsidiaries are restricted from making such distributions or payments under applicable law or regulation or under the terms of the Credit Agreement or any future financing arrangements, or are otherwise unable to provide such funds, Solaris Inc.’s liquidity and financial condition could be materially adversely affected.
To the extent that Solaris Inc. needs funds, including to make payments under the Tax Receivable Agreement (as defined below), and Solaris LLC or its subsidiaries are restricted from making such distributions or payments under applicable law or regulation or under the terms of the Credit Agreement or any future financing arrangements, or are otherwise unable to provide such funds, Solaris Inc.’s liquidity and financial condition could be materially adversely affected.
For additional discussion of our executive officers and directors' business affiliations and the potential conflicts of interest of which our stockholders should be aware, see Note 13. “Related Party Transactions” under Part II, Item 8.
For additional discussion of our executive officers and directors' business affiliations and the potential conflicts of interest of which our stockholders should be aware, see Note 18. “Related Party Transactions” under Part II, Item 8.
This payment would equal the present value of 28 Table of Contents hypothetical future payments that could be required to be paid under the Tax Receivable Agreement (determined by applying a discount rate equal to the 12-month term Secured Overnight Financing Rate (“SOFR”) published by CME Group Benchmark Administration Limited plus 71.513 basis points).
This payment would equal the present value of hypothetical future payments that could be required to be paid under the Tax Receivable Agreement (determined by applying a discount rate equal to the 12-month term Secured Overnight Financing Rate (“SOFR”) published by CME Group Benchmark Administration Limited plus 71.513 basis points).
Any determination to pay dividends and other distributions in cash, stock or property by us in the future will be dependent on then-existing conditions, including business conditions, our financial condition, results of 25 Table of Contents operations, liquidity, capital requirements, contractual restrictions including restrictive covenants contained in debt agreements and other factors.
Any determination to pay dividends and other distributions in cash, stock or property by us in the future will be dependent on then-existing conditions, including business conditions, our financial condition, results of operations, liquidity, capital requirements, contractual restrictions including restrictive covenants contained in debt agreements and other factors.
We face risks that are outside of our control which could significantly disrupt the demand for oil and natural gas and our products and services, and adversely impact our operations and financial condition.
We face risks that are outside of our control which could significantly disrupt the demand for oil and natural gas, power generation and our products and services, and adversely impact our operations and financial condition.
Compliance with these requirements may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner. 29 Table of Contents Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business.
Compliance with these requirements may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner. Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business.
To the extent we elected to pursue such targets and were able to achieve the desired target levels, such achievement may have been accomplished as a result of entering into various contractual arrangements, including the purchase of various credits or offsets that may be deemed to mitigate our ESG impact instead of actual changes in our ESG performance.
To the extent we elected to pursue such targets and were able to achieve the desired target levels or any associated interim milestones, such achievement may have been accomplished as a result of entering into various contractual arrangements, including the purchase of various credits or offsets that may be deemed to mitigate our ESG impact instead of actual changes in our ESG performance.
Such agreements may require each party to indemnify the other against certain claims regardless of the negligence or other fault of the indemnified party; however, many states place limitations on contractual indemnity agreements, particularly agreements that indemnify a party against the consequences of its own negligence.
Such agreements may 28 Table of Contents require each party to indemnify the other against certain claims regardless of the negligence or other fault of the indemnified party; however, many states place limitations on contractual indemnity agreements, particularly agreements that indemnify a party against the consequences of its own negligence.
These executive officers and directors may have conflicts of interest in allocating their time between these entities or whether to present potential business opportunities to other entities prior to presenting them to us, which could 26 Table of Contents cause additional conflicts of interest.
These executive officers and directors may have conflicts of interest in allocating their time between these entities or whether to present potential business opportunities to other entities prior to presenting them to us, which could cause additional conflicts of interest.
Additionally, during times when the natural gas or crude oil markets weaken, our customers are more likely to experience financial difficulties, including being unable to access debt or equity financing, which could result in a reduction in our customers' 21 Table of Contents spending for our systems and services.
Additionally, during times when the natural gas or crude oil markets weaken, our customers are more likely to experience financial difficulties, including being unable to access debt or equity financing, which could result in a reduction in our customers' spending for our systems and services.
If we are unable to adequately assess the creditworthiness of existing or future customers or unanticipated deterioration in their creditworthiness, any resulting bankruptcy or increase in nonpayment or nonperformance by them and our inability to re-market or otherwise use our equipment could have a material adverse effect on our business, financial condition, prospects or results of operations. ​ Our Credit Agreement subjects us to various financial and other restrictive covenants.
If we are unable to adequately assess the creditworthiness of existing or future customers or unanticipated deterioration in their creditworthiness, any resulting bankruptcy or increase in nonpayment or nonperformance by them and our inability to re-market or otherwise use our equipment could have a material adverse effect on our business, financial condition, prospects or results of operations. ​ Our financing agreements subject us to various financial and other restrictive covenants.
For example, if the Tax Receivable Agreement were terminated immediately after the filing of this Annual Report the estimated termination payments would, in the aggregate, be approximately $69.9 million (calculated using a discount rate equal to the 12-month term SOFR published by CME Group Benchmark Limited plus 71.513 basis points, applied against an undiscounted liability of $88.6 million, based upon the last reported closing sale price of our Class A common stock on December 31, 2023).
For example, if the Tax Receivable Agreement were terminated immediately after the filing of this Annual Report the estimated termination payments would, in the aggregate, be approximately $115.6 million (calculated using a discount rate equal to the 12-month term SOFR published by CME Group Benchmark Limited plus 71.513 basis points, applied against an undiscounted liability of $163.8 million, based upon the last reported closing sale price of our Class A common stock on December 31, 2024).
The goal is to integrate actions taken currently by us regarding ESG issues, to assure corporate governance for a complex assessment of the environmental impact of our products and activities, and to set a framework for the identification of sustainable development risks.
The goal is to integrate actions taken currently by us regarding ESG issues, to assure corporate governance for a complex assessment of the environmental and social impact of our products and activities, 27 Table of Contents and to set a framework for the identification of sustainable development risks.
Such anti-indemnity acts may restrict or void a party's indemnification of us, which could have a material adverse effect on our business, financial condition, prospects and results of operations. Changes to applicable tax laws and regulations or exposure to additional income tax liabilities could affect our business and future profitability.
Such anti-indemnity acts may restrict or void a party's indemnification of us, which could have a material adverse effect on our business, financial condition, prospects and results of operations. Changes to applicable tax laws and regulations or exposure to additional income tax liabilities could affect our operating results and cash flows.
The foregoing number is merely an estimate and the actual payment could differ materially. There can be no assurance that we will be able to finance our obligations under the Tax Receivable Agreement. Please read Note 10. “Income Taxes” under Part II, Item 8. “Financial Statements and Supplementary Data” for additional information.
The foregoing number is merely an estimate and the actual payment could differ 33 Table of Contents materially. There can be no assurance that we will be able to finance our obligations under the Tax Receivable Agreement. Please read Note 15. “Income Taxes” under Part II, Item 8. “Financial Statements and Supplementary Data” for additional information.
We are subject to various complex and evolving U.S. federal, state and local taxes. U.S. federal, state and local tax laws, policies, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to 24 Table of Contents us, in each case, possibly with retroactive effect.
We are subject to various complex and evolving U.S. federal, state and local tax laws. U.S. federal, state and local tax laws, policies, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us, in each case, possibly with retroactive effect.
Furthermore, our ability to attract new customers may be impaired if they elect not to engage us because they view our safety record as unacceptable. ​ Risks Related to Financial Condition: Our business depends on domestic capital spending by the oil and natural gas industry, and reductions in capital spending could have a material adverse effect on our liquidity, results of operations and financial condition.
Furthermore, our ability to attract new customers may be impaired if they elect not to engage us because they view our safety record as unacceptable. ​ Risks Related to Financial Condition Our business depends on domestic capital spending by the industries we service, and reductions in capital spending could have a material adverse effect on our liquidity, results of operations and financial condition.
As cyber incidents continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber incidents. Our insurance coverage for cyberattacks may not be sufficient to cover all the losses we may experience as a result of such cyberattacks.
As cyber incidents continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber incidents. Our insurance coverage may not be sufficient to cover all the losses (including potential reputational loss) or expenses we may experience as a result of such cyberattacks.
Any significant variance in our interpretation of current tax laws or a successful challenge of one or more of our tax positions by the Internal Revenue Service or other tax authorities could increase our future tax liabilities and have an adverse effect on our business and future profitability.
Any significant variance in our interpretation of current tax laws or a successful challenge of one or more of our tax positions by the Internal Revenue Service or other tax authorities could increase our future tax liabilities and have an adverse effect on our operating results and cash flows.
The adoption and implementation of any international, federal, regional or state legislation, executive actions, regulations or other regulatory initiatives that impose more stringent standards that restrict the areas in which this sector may produce oil and natural gas or generate GHG emissions could result in increased compliance costs or costs of consuming fossil fuels, which could reduce demand for our products and services and could have a material adverse effect on our business, financial condition, results of operations and cash flows and revenues. ​ ​ 23 Table of Contents Increasing attention to environmental, social and governance (“ESG”) matters may impact our business.
The adoption and implementation of any international, federal, regional or state legislation, executive actions, regulations or other regulatory and policy initiatives that impose more stringent standards that restrict the areas in which this sector may produce oil and natural gas or generate GHG emissions could result in increased compliance costs or costs of consuming fossil fuels, which could reduce demand for our products and services and could have a material adverse effect on our business, financial condition, results of operations and cash flows and revenues.
As a result of the volatility of the oilfield services industry and the demanding nature of the work, workers may choose to pursue employment in fields that offer a more desirable work environment at wage rates that are competitive.
As a result of the volatility of the industries we service and the demanding nature of the work, workers may choose to pursue employment in fields that offer a more desirable work environment at wage rates that are competitive.
These restrictions may limit our operational or financial flexibility and could subject us to potential defaults under our Credit Agreement.
These restrictions may limit our operational or financial flexibility and could subject us to potential defaults under our financing agreements.
We rely on a few key employees whose absence or loss could adversely affect our business. Many key responsibilities within our business have been assigned to a small number of employees. The loss of their services, whether permanently or temporarily could adversely affect our business. We do not have any written employment agreements with our executives at this time.
Many key responsibilities within our business have been assigned to a small number of employees, including within our Power Solutions segment. The loss of their services, whether permanently or temporarily could adversely affect our business. We do not have any written employment agreements with our executives at this time.
Unfavorable ESG ratings may lead to increased negative investor sentiment toward us or our customers and to the diversion of investment to other industries which could have a negative impact on our stock price and/or our access to and costs of capital.
While such ratings do not impact all investors’ investment or voting decisions, unfavorable ESG ratings may lead to increased negative investor sentiment toward us or our customers and to the diversion of investment to other industries which could have a negative impact on our stock price and/or our access to and costs of capital.
It is not certain that we will be able to maintain the same relationships or ability to offer our products and services in the wake of consolidation, which could have an adverse effect on our business, results of operations or financial condition.
It is not certain that we will be able to maintain the same relationships or ability to offer our products and services in the wake of consolidation, which could have an adverse effect on our business, results of operations or financial condition. Our Power Solutions segment is dependent on our relationships with key suppliers to obtain equipment.
The adoption of any federal, state or local laws or the implementation of regulations or issuance of executive orders regarding hydraulic fracturing, seismic activities, or leasing activities on federal properties, or the inability of our customers to maintain adequate water supplies could potentially cause a decrease in the completion of new oil and gas wells and an associated decrease in demand for our services and increased compliance costs and time, which could have a material adverse effect on our business, results of operations, and financial condition. 22 Table of Contents We are subject to environmental and occupational health and safety laws and regulations that may expose us to significant costs and liabilities.
The adoption of any federal, state or local laws or the implementation of regulations or issuance of executive orders regarding hydraulic fracturing, seismic activities, or leasing activities on federal properties, or the inability of our customers to maintain adequate water supplies could potentially cause a decrease in the completion of new oil and gas wells and an associated decrease in demand for our services and increased compliance costs and time, which could have a material adverse effect on our business, results of operations, and financial condition.
Certain of our executive officers and directors, who are responsible for managing the direction of our operations, hold positions of responsibility with other entities (including affiliated entities) that are in the oil and natural gas industry.
Certain of our executive officers and directors, who are responsible for managing the direction of our operations, hold positions of responsibility with other entities (including affiliated entities) that are in the industries we service.
Further, because our operations are located in different regions of the United States, there exists variability in seasonal weather events, which may include periods of heavy snow, ice or rain.
Further, because our operations are located in different regions of the United States, there exists variability in seasonal weather events, which may include periods of excessive heat or heavy snow, ice, or rain, which may be exacerbated by the effects of climate change.
The threat of climate change continues to attract considerable attention in the United States and foreign countries.
The threat of climate change continues to attract considerable attention in the United States and around the world.
Additionally, as a public company, we are required to: (i) comply with any new requirements if adopted by the Public Company Accounting Oversight Board (United States) requiring mandatory audit firm rotation or a supplement to the auditor's report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer; (ii) provide certain disclosures regarding executive compensation required of larger public companies; or (iii) hold nonbinding advisory votes on executive compensation.
As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. 34 Table of Contents Additionally, as a public company, we are required to: (i) comply with any new requirements if adopted by the Public Company Accounting Oversight Board (United States) requiring mandatory audit firm rotation or a supplement to the auditor's report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer; (ii) provide certain disclosures regarding executive compensation required of larger public companies; or (iii) hold nonbinding advisory votes on executive compensation.
Continuing or worsening inflationary issues and associated changes in monetary policy may result in increases to the cost of our goods, services and personnel, which in turn could cause our capital expenditures and operating costs to rise.
Sustained levels of inflation and associated changes in monetary policy may result in increases to the cost of our goods, services and personnel, which in turn could cause our capital expenditures and operating costs to rise.
In addition, our business activities present risks of incurring significant environmental costs and liabilities, including costs and liabilities resulting from our management, transportation and disposal of regulated materials, such as oilfield and other wastes, because of air emissions and wastewater discharges related to our operations, and due to historical oilfield industry operations and waste disposal practices.
In addition, our business activities present risks of incurring significant environmental costs and liabilities, including costs and liabilities resulting from our management, transportation and disposal of regulated materials, such as oilfield and other wastes, air emissions and wastewater discharges related to our operations, and due to historical oilfield industry operations and waste disposal practices at locations where we operate (in certain circumstances, regardless of fault or contribution).
Due to the high levels of inflation in the U.S., the Federal Reserve and other central banks increased interest rates multiple times in 2022 and 2023, and although the Federal Reserve has indicated that such increases have ceased going into 2024, uncertainty remains as to when or if such elevated rates may be decreased.
Due to the high levels of inflation in the U.S., the Federal Reserve and other central banks increased interest rates multiple times in 2022 and 2023, and although the Federal Reserve began to lower interest rates in 2024, uncertainty remains as to when or to the extent such elevated rates may be further decreased.
As of December 31, 2023, the Company had approximately $226.0 million of U.S. federal NOL carryovers and $49.4 million of state NOL carryovers. $169.9 million of our U.S. federal NOL carryovers have no expiration date and the remaining U.S. federal NOL carryovers expire in 2037. $26.1 million of our state NOL carryovers will expire in varying amounts beginning in 2037.
As of December 31, 2024, the Company had approximately $260.1 million of U.S. federal NOL carryovers and $57.0 million of state NOL carryovers. $207.3 million of our U.S. federal NOL carryovers have no expiration date and the remaining U.S. federal NOL carryovers expire in 2037. $29.9 million of our state NOL carryovers will expire in varying amounts beginning in 2037.
Sales of substantial amounts of our Class A common stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices of our Class A common stock. Holders of our Class A common stock may not receive dividends on our Class A common stock.
Sales of substantial amounts of our Class A common stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices of our Class A common stock. Certain holders of our shares of Class A common stock and Class B common stock, including Yorktown Energy Partners X, L.P.
Increasing attention to climate change, increasing societal expectations on companies to address climate change, and potential consumer use of substitutes to fossil-fuel energy commodities may result in increased costs, reduced demand for our customers’ hydrocarbon products and our products and services, reduced profits, increased governmental investigations and private litigation against us, and negative impacts on our stock price and access to capital markets.
Increased attention to ESG matters, including increasing societal expectations on companies to address climate change, increasing investor scrutiny of corporate governance and social dynamics, and shifts in the consumer demand for fossil fuel alternatives, may result in increased costs, reduced demand for our customers’ hydrocarbon products and our products and services, reduced profits, increased governmental investigations and private litigation against us, and may have negative impacts on our stock price and access to capital markets.
In connection with the closing of the IPO, Solaris Inc. entered into the Tax Receivable Agreement with members of Solaris LLC (each such person and any permitted transferee, a “TRA Holder,” and together, the “TRA Holders”). For additional information, see “Payables Related to the Tax Receivable Agreement” in Note 10. “Income Taxes” and Note 13.
In connection with the closing of its initial public offering (“IPO”), Solaris Inc. entered into a Tax Receivable Agreement with the other then-existing members of Solaris LLC (each such person and any permitted transferee, a “TRA Holder,” and together, the “TRA Holders”). For additional information, see “Payables Related to the Tax 32 Table of Contents Receivable Agreement” in Note 15.
We may grow through acquisitions and our failure to properly plan and manage those acquisitions may adversely affect our performance. We have completed and may, in the future, pursue asset acquisitions or acquisitions of businesses. We must plan and manage any acquisitions and integrations effectively to achieve revenue growth and maintain profitability in our evolving market.
We have completed and may, in the future, pursue asset acquisitions or acquisitions of businesses. We must plan and manage any acquisitions and integrations effectively to achieve revenue growth and maintain profitability in our evolving market. If we fail to manage acquisitions and integrations effectively, our results of operations could be adversely affected.
We have, and may in the future, experienced significant fluctuations in operating results as a result of the reactions of our customers to changes in oil and natural gas prices. ​ 16 Table of Contents We face significant competition, as well as the propsect of further consolidation in the industry and amongst current and potential customers, either of which may impede our ability to gain market share or cause us to lose market share, or that could make adoption of new product offerings or services difficult.
We face significant competition, as well as the prospect of further consolidation in the industry and amongst current and potential customers, either of which may impede our ability to gain market share or cause us to lose market share, or that could make adoption of new product offerings or services difficult.
We typically enter into agreements with our customers governing the use and operation of our systems and services, which usually include certain indemnification provisions for losses resulting from operations.
Anti-indemnity provisions enacted by many states may restrict or prohibit a party's indemnification of us. We typically enter into agreements with our customers governing the use and operation of our systems and services, which usually include certain indemnification provisions for losses resulting from operations.
We derive, and may continue to derive, a significant portion of our revenue from a relatively small number of customers and the operations of our customers have and may continue to experience delays or disruptions and temporary suspensions of operations.
We derive, and may continue to derive, a significant portion of our revenue from a relatively small number of customers and the operations of our customers have and may continue to experience delays or disruptions and temporary suspensions of operations. For example, our Power Solutions segment is presently significantly dependent upon a single data center client.
We are not required to declare future dividends and holders of our Class A common stock are entitled to receive only such dividends as our board of directors may declare.
“Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of this Annual Report. We are not required to declare future dividends and holders of our Class A common stock are entitled to receive only such dividends as our board of directors may declare.
W e typically do not enter into long-term contractual agreements with our customers and if we were to lose any material customer, we may not be able to redeploy our equipment at similar utilization or pricing levels or within a short period of time and such loss could have a material adverse effect on our business until the equipment is redeployed at similar utilization or pricing levels.
W e typically do not enter into long-term contractual agreements with our customers and if we were to lose any material customer, we may not be able to redeploy our equipment at similar utilization or pricing levels or within a short period of time and such loss could have a material adverse effect on our business until the equipment is redeployed at similar utilization or pricing levels. ​ 20 Table of Contents Events outside of our control, including a pandemic or outbreak of an infectious disease, political unrest, armed conflicts and economic recessions occurring around the globe, could materially adversely affect our business, liquidity, results of operations and financial condition.
We declared our first dividend to Class A stockholders in the fourth quarter of 2018 and have continued to declare dividends on a quarterly basis. See Part II, Item 5. “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of this Annual Report.
Holders of our Class A common stock may not receive dividends on our Class A common stock. We declared our first dividend to Class A stockholders in the fourth quarter of 2018 and have continued to declare dividends on a quarterly basis. See Part II, Item 5.
“Related Party Transactions” under Part II, Item 8.
“Income Taxes” and Note 18. “Related Party Transactions” under Part II, Item 8.
Future sales of our Class A common stock in the public market, or the perception that such sales may occur, could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us. We may sell additional shares of our Class A common stock in subsequent offerings.
In addition, general fluctuations in stock markets could have a material adverse effect on the market for, or liquidity of, our common stock, regardless of our actual operating performance. 29 Table of Contents Future sales of our Class A common stock in the public market, or the perception that such sales may occur, could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us.
The terms of one or more classes or series of preferred stock could adversely impact the voting power or value of our Class A common stock. Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred stock could affect the residual value of the Class A common stock.
The terms of one or more classes or series of preferred stock could adversely impact the voting power or value of our Class A common stock.
At the same time, cyber incidents, including deliberate attacks, have increased. The U.S. government has issued public warnings that indicate that energy assets might be specific targets of cyber security threats.
The U.S. government has issued public warnings that indicate that energy assets might be specific targets of cybersecurity threats.
Certain Designated Parties are not limited in their ability to compete with us, and the corporate opportunity provisions in our amended and restated certificate of incorporation could enable such Designated Parties and their respective affiliates to benefit from corporate opportunities that might otherwise be available to us.
Moreover, this concentration of stock ownership may also adversely affect the trading price of our Class A common stock to the extent investors perceive a disadvantage in owning stock of a company with a large stockholder. 30 Table of Contents Certain Designated Parties are not limited in their ability to compete with us, and the corporate opportunity provisions in our amended and restated certificate of incorporation could enable such Designated Parties and their respective affiliates to benefit from corporate opportunities that might otherwise be available to us.
As a result, numerous proposals have been made and are likely to continue to be made at the international, national, regional and state levels of government related to the production and processing of fossil fuels and to monitor and limit emissions of GHGs as well as to eliminate such future emissions.
As a result, numerous proposals have been made and are likely to continue to be made at the international, national, regional and state levels of government related to restricting or phasing out the production and processing of fossil fuels, the monitoring and reporting of, or regulation of GHG emissions, and advancing or subsidizing alternative sources of energy.
Notwithstanding this, it is possible that a conflict of interest could have a material adverse effect on our liquidity, results of operations and financial condition. Our failure to protect our proprietary information and intellectual property rights, or any successful intellectual property challenges or infringement proceedings against us, could result in a loss in our competitive advantage or market share.
Our failure to protect our proprietary information and intellectual property rights, or any successful intellectual property challenges or infringement proceedings against us, could result in a loss in our competitive advantage or market share.
These and other factors can, individually or collectively contribute to unprecedented negative global economic impacts, including a significant decrease in demand. 18 Table of Contents While we expect these matters discussed above will continue to disrupt our operations in some way, the degree of the adverse financial impact cannot be reasonably estimated at this time.
While we expect these matters discussed above will continue to disrupt our operations in some way, the degree of the adverse financial impact cannot be reasonably estimated at this time.
Such a conflict could cause an individual in our management or on our board of directors to seek to advance his or her economic interests above ours. Further, the appearance of conflicts of interest created by related party transactions could impair the confidence of our investors. Our board of directors, or a committee thereof, regularly reviews these transactions.
“Financial Statements and Supplementary Data.” Related party transactions create the possibility of conflicts of interest with regard to our management or directors. Such a conflict could cause an individual in our management or on our board of directors to seek to advance his or her economic interests above ours.
The oil and natural gas industry has become increasingly dependent on digital technologies to conduct certain processing activities. For example, we depend on digital technologies to perform many of our services and to process and record financial and operating data and to collect and store sensitive data, including our proprietary business information and personally identifiable information of our employees.
For example, we depend on digital information and operational technologies to perform many of our services and to process and record financial and operating data and to collect and store sensitive data, including our proprietary business information and personally identifiable information of our employees. At the same time, cyber incidents, including deliberate attacks, have increased.
Technological advancements in well service products and technologies, including those that reduce the amount of proppant or chemicals required for hydraulic fracturing operations, could have a material adverse effect on our business, financial condition and results of operations. Our industry is characterized by rapid and significant technological advancements and introductions of new products and services using new technologies.
Technological advancements in the products and technologies we provide could have a material adverse effect on our business, financial condition and results of operations. The markets in which we operate are characterized by rapid and significant technological advancements and introductions of new products and services using new technologies.
The degree to which events outside of our control adversely impact our results will also depend on future developments, which are highly uncertain and cannot be predicted.
The degree to which events outside of our control adversely impact our results will also depend on future developments, which are highly uncertain and cannot be predicted. These and other factors can, individually or collectively contribute to unprecedented negative global economic impacts, including a significant decrease in demand.
Such ESG matters may also impact our customers, which may adversely impact our business, financial condition or results of operations. Anti-indemnity provisions enacted by many states may restrict or prohibit a party's indemnification of us.
Such ESG matters may also impact our customers, which may adversely impact our business, financial condition or results of operations.
Changes in the transportation industry, including the availability or reliability of transportation to supply our products and services, fluctuations in transportation costs, or changes in the way in which proppant or chemicals are transported to the well site, could impair the ability of our customers to take delivery of proppant or chemicals or make our products and services less attractive and thereby adversely impact our business.
Changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements could have an adverse effect on our business, prospects, financial condition and operating results, the extent of which cannot be predicted with certainty at this time. 19 Table of Contents Changes in the transportation industry, including the availability or reliability of transportation to supply our products and services, fluctuations in transportation costs, or changes in the way in which proppant or chemicals are transported to the well site, could impair the ability of our customers to take delivery of proppant or chemicals or make our products and services less attractive and thereby adversely impact our business.
Our two largest beneficial owners, Yorktown Energy Partners X, L.P. and William A. Zartler own a substantial majority of our Class B common stock, which represents approximately 32% of our combined economic interest and voting power.
Zartler and the legacy equity holders of MER own a substantial majority of our Class B common stock, which represents approximately 41% of our combined economic interest and voting power.
If our board of directors elects to issue preferred stock, it could be more difficult for a third party to acquire us.
Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred stock could affect the residual value of the Class A common stock. 31 Table of Contents If our board of directors elects to issue preferred stock, it could be more difficult for a third party to acquire us.
These and other actions could accelerate the transition away from fossil fuels and reduce demand for hydrocarbons, therefore reducing demand for our products and services.
For example, the IRA 2022 appropriated significant federal funding for renewable energy initiatives and incentives and imposed the first-ever federal fee on excess methane emissions from certain oil and gas facilities. These and other actions could accelerate the transition away from fossil fuels and reduce demand for hydrocarbons, therefore reducing demand for our products and services.
If we fail to manage acquisitions and integrations effectively, our results of operations could be adversely affected. We engage in transactions with related parties and such transactions present possible conflicts of interest that could have an adverse effect on us. We have entered into transactions with related parties.
We engage in transactions with related parties and such transactions present possible conflicts of interest that could have an adverse effect on us. We have entered into transactions with related parties. The details of certain of these transactions are set forth in Note 18. “Related Party Transactions” under Part II, Item 8.
Limits on our ability to effectively use, implement or adapt to new technologies may have a material adverse effect on our business, financial condition and results of operations. 19 Table of Contents We are subject to cyber security risks. A cyber incident could occur and result in information theft, data corruption, operational disruption and/or financial loss.
We are subject to cybersecurity risks. A cyber incident could occur and result in information theft, data corruption, operational disruption and/or financial loss. The industries we service have become increasingly dependent on digital technologies to conduct certain processing activities.
“Business – Environmental and Occupational Health and Safety Regulations” for more discussion on the threat of climate and restriction of GHG emissions.
Congress will revise existing climate-related laws and regulations or impact climate-related financial and societal trends and initiatives is uncertain and cannot be predicted at this time. See Part I, Item 1. “Business – Environmental and Occupational Health and Safety Regulations” for more discussion on the impact of climate-related initiatives and the restriction of GHG emissions.
In addition, certain cyber incidents, such as surveillance, may remain undetected for an extended period. Our systems and insurance coverage for protecting against cyber security risks, including cyberattacks, may not be sufficient and may not protect against or cover all of the losses (including potential reputational loss) we may experience as a result of the realization of such risks.
In addition, certain cyber incidents, such as surveillance, may remain undetected for an extended period. Despite the implementation of our cybersecurity processes, our security measures cannot guarantee that a significant cyberattack will not occur.
Removed
Events outside of our control, including a pandemic or outbreak of an infectious disease, political unrest, armed conflicts and economic recessions occurring around the globe, could materially adversely affect our business, liquidity, results of operations and financial condition.
Added
We have, and may in the future, experienced significant fluctuations in operating results as a result of the reactions of our customers to changes in oil and natural gas prices. We face a variety of risks related to our entry into a new line of business following the completion of the MER Acquisition.
Removed
The details of certain of these transactions are set forth in Note 13. “Related Party Transactions” under Part II, Item 8. “Financial Statements and Supplementary Data.” Related party transactions create the possibility of conflicts of interest with regard to our management or directors.
Added
Our entry into scaled distributed power solutions is expected to enhance our position as a mobile equipment and logistics solution provider to the industries we service as well as diversify our business.
Removed
Our and our customers' operations are subject to a number of risks arising out of the threat of climate change, energy conservation measures or initiatives that stimulate demand for alternative forms of energy that could result in increased operating and capital costs for our customers and reduced demand for the products and services we provide.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeTo manage the risks associated with cybersecurity threats, we are continually assessing, reviewing and adopting new processes, systems and resources in an effort to protect the information in our possession. We have endeavored to implement policies, standards, and technical controls based on the National Institute of Standards and Technology (NIST) framework with the aim of protecting our networks and applications.
Biggest changeTo manage the risks associated with cybersecurity threats, we are continually assessing, reviewing and adopting new processes, systems and resources in an effort to protect our operations and the information in our possession.
The Audit Committee assists our Board of Directors in exercising oversight of the Company’s cybersecurity, information security and information technology risks. At least annually, the Audit Committee reviews and discusses with management the Company’s policies, procedures and practices with respect to cybersecurity, information security and information and operational technology, including related risks.
The Audit Committee assists our board of directors in exercising oversight of the Company’s cybersecurity, information security and information and operational technology risks. At least annually, the Audit Committee reviews and discusses with management the Company’s policies, procedures and practices with respect to cybersecurity, information security and information and operational technology, including related risks.
We conduct periodic incident response tabletop exercises and planned incident response drills to refine and update incident response processes. ● Cybersecurity Training and Awareness: All employees and contractors are required to receive bi-annual cybersecurity awareness training, and have deployed internal phishing campaigns to measure the effectiveness of the training program.
We aim to conduct periodic incident response tabletop exercises and planned incident response drills to refine and update incident response processes. ● Cybersecurity Training and Awareness: All employees and contractors are required to receive bi-annual cybersecurity awareness training, and have deployed internal phishing campaigns to measure the effectiveness of the training program.
A multi-factor authentication process has been implemented for employees accessing company information. ● Encryption and Data Protection: Encryption methods are used to protect sensitive data in transit and at rest. This includes the encryption of customer data, financial information, and other confidential data.
A multi-factor authentication process has been implemented for employees accessing company systems. ● Encryption and Data Protection: Encryption methods are used to protect sensitive data in transit and at rest. This includes the encryption of customer data, financial information, and other confidential data.
We seek to assess, identify and manage cybersecurity risks through the processes described below: ● Risk Assessment: A multi-layered system designed to protect and monitor data and cybersecurity risk has been implemented. Regular assessments of our cybersecurity safeguards are conducted periodically.
We seek to assess, identify and manage cybersecurity risks through the processes described below: ● Risk Assessment: A multi-layered system designed to protect and monitor data and cybersecurity risk has been implemented. Assessments of our cybersecurity safeguards are conducted periodically.
Board of Directors’ Oversight of Risks from Cybersecurity Threats and Management’s Role The Audit Committee of our Board of Directors is responsible for overseeing cybersecurity, information security and information technology risks, as well as management’s actions to identify, assess, mitigate and remediate those risks.
Board of Directors’ Oversight of Risks from Cybersecurity Threats and Management’s Role The Audit Committee of our board of directors is responsible for overseeing cybersecurity, information security and information and operational technology risks, as well as management’s actions to identify, assess, mitigate and remediate those risks.
Management conducts regular evaluations designed to assess, identify and manage material cybersecurity risks, and we endeavor to update cybersecurity infrastructure, procedures, policies, and education programs in response. We use firewalls and protection software, and we additionally rely on a third-party vendor for alerts regarding suspicious activity.
Management conducts periodic evaluations designed to assess, identify and manage material cybersecurity risks, and we endeavor to update cybersecurity infrastructure, procedures, policies and education programs in response. We use firewalls and protection software, and we additionally rely on a third-party vendor for alerts regarding suspicious activity.
New hires also receive training in response to drills and simulated attacks. ● Access Controls: Users are provided with access consistent with the principle of least privilege, which requires that users be given no more access than necessary to complete their job functions.
New hires are also required to receive training in the form of drills and simulated attacks. ● Access Controls: Users are provided with access consistent with the principle of least privilege, which requires that users be given no more access than necessary to complete their job functions.
While we devote resources to our security measures to protect our systems and information, these measures cannot provide absolute security or eliminate all risks associated with cyberattacks to us or third parties with whom we do business. No security measure is infallible. See Item 1A.
While we devote resources to our security measures to protect our systems and information, these measures cannot provide absolute security or eliminate all risks associated with cyberattacks on us or third parties with whom we do business. No security measure is infallible. See Part I, Item 1A.
However, we acknowledge that cybersecurity threats are continually evolving, and the possibility of future cybersecurity incidents remains and recognize cybersecurity 31 Table of Contents measures have become more critical due to remote work, and we continuously evaluate improvements and new measures to protect our information and computing systems.
However, we acknowledge that cybersecurity threats are continually evolving, and the possibility of future cybersecurity incidents remains and recognize cybersecurity measures have become more critical due to remote work, and we continuously evaluate improvements and new measures to protect our information and computing systems.
In an effort to mitigate these risks, before engaging with any third-party service provider, we conduct due diligence to evaluate their cybersecurity capabilities. Additionally, we endeavor to include cybersecurity requirements in our contracts with these providers and endeavor to require them to adhere to security standards and protocols, as applicable.
In an effort to mitigate these risks, before engaging with any third-party service provider, we conduct due diligence to evaluate their 35 Table of Contents cybersecurity capabilities. Additionally, we endeavor to include cybersecurity requirements in our contracts with these providers and endeavor to require them to adhere to security standards and protocols, as applicable.
Despite the implementation of our cybersecurity processes, our security measures cannot guarantee that a significant cyberattack will not occur. A successful attack on our information technology (“IT”) systems could have significant consequences to the business.
Despite the implementation of our cybersecurity processes, our security measures cannot guarantee that a significant cyberattack will not occur. A successful attack on our information or operational technology systems could have significant consequences to the business.
In addition, our Chief Administrative Officer (“CAO”) is responsible for upward reporting of emerging cybersecurity incidents to our Audit Committee, who in turn reports to our Board of Directors. Recognizing the importance of cybersecurity to the success and resilience of our business, our Board of Directors considers cybersecurity to be a vital aspect of corporate governance.
In addition, our Chief Administrative Officer (“CAO”) is responsible for upward reporting of significant cybersecurity incidents to our Audit Committee, who in turn reports to our board of directors, as appropriate. Recognizing the importance of cybersecurity to the success and resilience of our business, our Board of Directors considers cybersecurity to be a vital aspect of corporate governance.
“Risk Factors” for additional information about the risks to our business associated with a breach or compromise to our IT systems.
“Risk Factors” for additional information about the risks to our business associated with a breach or compromise to our information or operational technology systems.
Item 1C. Cybersecurity Description of Processes for Assessing, Identifying, and Managing Cybersecurity Risks In the normal course of business, we collect and store certain sensitive Company information, including proprietary and confidential business information, trade secrets, intellectual property, sensitive third party information and employee information, and certain personal identifiable information.
In the normal course of business, we collect and store certain sensitive Company information, including proprietary and confidential business information, trade secrets, intellectual property, sensitive third party information and employee information, and certain personal identifiable information.
Impact of Risks from Cybersecurity Threats As of the date of this Annual Report, we are not aware of any previous cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company.
Impact of Risks from Cybersecurity Threats As of the date of this Annual Report, though we and the third parties with whom we do business have experienced certain cybersecurity incidents, we are not aware of cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company.
Removed
To facilitate effective oversight, our CAO meets regularly with management to proactively review current cybersecurity threats as well as our potential exposure.
Added
Item 1C. Cybersecurity Description of Processes for Assessing, Identifying, and Managing Cybersecurity Risks The security and integrity of our information and operational technology infrastructure is critical to our business and our ability to perform day-to-day operations and deliver services.
Removed
Our CAO, supported by members of our management team and information technology group, briefs the Audit Committee on cybersecurity matters as needed and holds discussions on cybersecurity risks, incident trends and the effectiveness of cybersecurity measures as necessitated by emerging material cyber risks. Item 2. Properties Our principal properties are described in Item 1. “Business” under the caption “—Our Properties.”
Added
We have endeavored to implement policies, standards, and technical controls based on the National Institute of Standards and Technology (NIST) framework with the aim of protecting our networks and applications.
Added
To facilitate effective oversight, our CAO meets regularly with the Information Technology department (“IT department”) which includes individuals who possess extensive experience in information technology and cybersecurity. The IT department reports directly to the CAO and is responsible for managing the Company’s cybersecurity initiatives, including technical risk assessments, implementation of controls, and response to cybersecurity incidents.
Added
The IT department has significant expertise in IT systems and cybersecurity, enabling the Company to respond effectively to cybersecurity risks and incidents. Item 2. Properties Our principal properties are described in Part I, Item 1. “Business” under the caption “—Our Properties.”

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 32 PART II ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 32 Item 6. Reserved 34 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 34 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 42 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 36 PART II ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 37 Item 6. Reserved 39 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 39 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 49 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” contained herein. 33 Table of Contents Issuer Purchases of Equity Securities The following table presents the total number of shares of our Class A common stock that we purchased during the year ended December 31, 2023 and the average price paid per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares ​ ​ Maximum Dollar ​ ​ ​ ​ ​ ​ ​ ​ ​ Purchased ​ ​ Value of Shares ​ ​ Total Number of ​ ​ Average Price ​ ​ as Part of Publicly ​ ​ that May Yet be ​ ​ Shares ​ ​ Paid Per ​ ​ Announced ​ ​ Purchased Under Period ​ Purchased (1) ​ ​ Share ​ ​ Plan (2) ​ ​ the Plan (2) January 1 - January 31 ​ — ​ ​ $ — ​ ​ — ​ ​ 50,000,000 February 1 - February 28 ​ — ​ ​ ​ — ​ ​ — ​ ​ 50,000,000 March 1 - March 31 ​ 1,788,838 ​ ​ ​ 8.82 ​ ​ 1,641,000 ​ ​ 35,557,509 April 1 - April 30 ​ 1,957 ​ ​ ​ 8.75 ​ ​ — ​ ​ 35,557,509 May 1 - May 31 ​ 1,144,100 ​ ​ ​ 7.81 ​ ​ 1,144,100 ​ ​ 26,627,518 June 1 - June 30 ​ 294,146 ​ ​ ​ 8.23 ​ ​ 293,400 ​ ​ 24,212,452 July 1 - July 31 ​ 876 ​ ​ ​ 8.72 ​ ​ — ​ ​ 24,212,452 August 1 - August 31 ​ 884 ​ ​ ​ 10.57 ​ ​ — ​ ​ 24,212,452 September 1 - September 30 ​ — ​ ​ ​ — ​ ​ — ​ ​ 24,212,452 October 1 - October 31 ​ — ​ ​ ​ — ​ ​ — ​ ​ 24,212,452 November 1 - November 30 ​ — ​ ​ ​ — ​ ​ — ​ ​ 24,212,452 December 1 - December 31 ​ 85,278 ​ ​ ​ 7.97 ​ ​ 85,278 ​ ​ 23,532,857 Total ​ 3,316,079 ​ ​ $ 8.40 ​ ​ 3,163,778 ​ ​ ​ ​ (1) Includes 3,163,778 shares repurchased as part of the share repurchase plan and 152,301 shares purchased to satisfy tax withholding obligations upon the vesting of restricted stock awarded to certain of our employees. ​ (2) In March 2023, the Company’s board of directors authorized a plan to repurchase up to $50 million of our Class A common stock. ​ Sales of Unregistered Equity Securities None.
Biggest change“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” contained herein. 38 Table of Contents Issuer Purchases of Equity Securities The following table presents the total number of shares of our Class A common stock that we purchased during the year ended December 31, 2024 and the average price paid per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares ​ ​ Maximum Dollar ​ ​ ​ ​ ​ ​ ​ ​ ​ Purchased ​ ​ Value of Shares ​ ​ Total Number of ​ ​ Average Price ​ ​ as Part of Publicly ​ ​ that May Yet be ​ ​ Shares ​ ​ Paid Per ​ ​ Announced ​ ​ Purchased Under Period ​ Purchased (1) ​ ​ Share ​ ​ Plan (2) ​ ​ the Plan (2) January 1 - January 31 ​ 474,726 ​ ​ $ 7.17 ​ ​ 474,726 ​ $ 20,128,802 February 1 - February 28 ​ 633,623 ​ ​ ​ 7.40 ​ ​ 633,623 ​ ​ 15,440,555 March 1 - March 31 ​ 181,707 ​ ​ ​ 8.47 ​ ​ — ​ ​ 15,440,555 April 1 - April 30 ​ 1,151 ​ ​ ​ 8.16 ​ ​ — ​ ​ 15,440,555 May 1 - May 31 ​ — ​ ​ ​ — ​ ​ — ​ ​ 15,440,555 June 1 - June 30 ​ 2,412 ​ ​ ​ 8.93 ​ ​ — ​ ​ 15,440,555 July 1 - July 31 ​ 216 ​ ​ ​ 13.26 ​ ​ — ​ ​ 15,440,555 August 1 - August 31 ​ 1,293 ​ ​ ​ 11.72 ​ ​ — ​ ​ 15,440,555 September 1 - September 30 ​ — ​ ​ ​ — ​ ​ — ​ ​ 15,440,555 October 1 - October 31 ​ — ​ ​ ​ — ​ ​ — ​ ​ 15,440,555 November 1 - November 30 ​ 3,153 ​ ​ ​ 20.86 ​ ​ — ​ ​ 15,440,555 December 1 - December 31 ​ — ​ ​ ​ — ​ ​ — ​ ​ 15,440,555 Total ​ 1,298,281 ​ ​ $ 7.51 ​ ​ 1,108,349 ​ ​ ​ ​ (1) Includes 1,108,349 shares repurchased as part of the share repurchase plan and 189,932 shares purchased to satisfy tax withholding obligations upon the vesting of restricted stock awarded to certain of our employees as of December 31, 2024. ​ (2) On March 1, 2023, the Company’s board of directors authorized a plan to repurchase up to $50 million of our Class A common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Shares of our Class A common stock trade on the NYSE under the symbol “SOI.” As of February 21, 2024, we had approximately 4 holders of record of our Class A common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Shares of our Class A common stock trade on the NYSE under the symbol “SEI.” As of February 26, 2025, we had approximately six holders of record of our Class A common stock.
Assumes dividend reinvestment on pay date. Securities Authorized for Issuance under Equity Compensation Plans The information relating to our equity compensation plans required by Item 5 is incorporated by reference to such information as set forth in Item 12.
Securities Authorized for Issuance under Equity Compensation Plans The information relating to our equity compensation plans required by Item 5 is incorporated by reference to such information as set forth in Part III, Item 12.
This number excludes owners for whom Class A common stock may be held in "street" name. There is no market for our Class B common stock.
This number excludes owners for whom Class A common stock may be held in "street" name. There is no market for our Class B common stock. As of February 26, 2025, we had 17 holders of record of our Class B common stock.
As of February 21, 2024, we had 13 holders of record of our Class B common stock. 32 Table of Contents Dividend Policy For the year ended December 31, 2023, the Company paid quarterly cash dividends totaling $0.45 per share of Class A common stock, compared to $0.42 per share paid in 2022.
Dividend Policy For the year ended December 31, 2024, the Company paid quarterly cash dividends totaling $0.48 per share of Class A common stock, compared to $0.45 per share paid in 2023.
In addition, our Credit Agreement contains certain restrictions on our ability to pay cash dividends to holders of our Class A common stock. Stock Performance Graph The graph below compares the cumulative total shareholder return on our common stock with the cumulative total return on the Russell 2000 Index and the Oilfield Service Index since May 11, 2017.
Stock Performance Graph The graph below compares the cumulative total shareholder return on our common stock with the cumulative total return on the Russell 2000 Index and the Oilfield Service Index since May 11, 2017.
The graph assumes $100 was invested in our common stock on May 11, 2017 and in each of the indexes and further assumes the reinvestment of dividends. We elected to include the Oilfield Service Index as our published industry or line-of-business index as we believe it is an appropriate benchmark for our line of business/industry. Source: Bloomberg.
We elected to include the Oilfield Service Index as our published industry or line-of-business index as we believe it is an appropriate benchmark for our line of business/industry. 37 Table of Contents Source: Bloomberg. Assumes dividend reinvestment on pay date.
Added
In addition, our Term Loan Agreement and revolving credit facility contain certain restrictions on our ability to pay cash dividends to holders of our Class A common stock.
Added
The graph assumes $100 was invested in our common stock on May 11, 2017 and in each of the indexes and further assumes the reinvestment of dividends.
Added
No shares were repurchased during the three months ended December 31, 2024. ​ Sales of Unregistered Equity Securities None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

32 edited+88 added−44 removed4 unchanged
Biggest changeOther Operating Expense, Net Other operating expense decreased $1.2 million, or 67%, to $0.6 million for the year ended December 31, 2023 compared to $1.8 million for the year ended December 31, 2022. Other operating expense in the year ended December 31, 2023 primarily relate to credit losses and loss on disposal of assets, partially offset by sales tax rebates.
Biggest changeOther operating expense for the year ended December 31, 2023 primarily relate to credit losses and loss on disposal of assets, partially offset by sales tax rebates. ​ 43 Table of Contents Interest Expense, Net Interest expense increased $8.5 million, or 257%, to $11.8 million for the year ended December 31, 2024 compared to $3.3 million for the year ended December 31, 2023.
We base our estimates on historical experience and on various other assumptions we believe to be reasonable according to the current facts and circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
We base our estimates on historical experience and on various other assumptions we believe are reasonable according to the current facts and circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Our actual results may differ materially from those anticipated as discussed in these forward-looking statements as a result of a variety of risks and uncertainties, including those described above in “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” included elsewhere in this Annual 34 Table of Contents Report, all of which are difficult to predict.
Our actual results may differ materially from those anticipated as discussed in these forward-looking statements as a result of a variety of risks and 39 Table of Contents uncertainties, including those described above in “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” included elsewhere in this Annual Report, all of which are difficult to predict.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Unless the context requires otherwise, references in this Annual Report to the "Company," "Solaris," "we," "us" and "our" refer to Solaris Oilfield Infrastructure, Inc. ("Solaris Inc.") and its consolidated subsidiaries, including Solaris Oilfield Infrastructure, LLC (“Solaris LLC”), our operating subsidiary.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Unless the context requires otherwise, references in this Annual Report to the "Company," "Solaris," "we," "us" and "our" refer to Solaris Energy Infrastructure, Inc. ("Solaris Inc.") and its consolidated subsidiaries, including Solaris Energy Infrastructure, LLC (“Solaris LLC”), our operating subsidiary.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying financial statements and related notes. This section of this Annual Report generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying financial statements and related notes. This section of this Annual Report generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
“Financial Statements and Supplementary Data,” Solaris Inc. is a party to the Tax Receivable Agreement under which it is contractually committed to pay the TRA Holders 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 or is deemed to realize in certain circumstances in periods after our initial public offering as a result of 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 initial public offering (“IPO”) or pursuant to an exercise of the Redemption Right or the Call Right (each as defined in the Solaris LLC Agreement) and additional tax basis arising from any payments Solaris Inc. makes under the Tax Receivable Agreement.
“Financial Statements and Supplementary Data,” Solaris Inc. is a party to the Tax Receivable Agreement under which it is contractually committed to pay the TRA Holders 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 or is deemed to realize in certain circumstances in periods after its IPO as a result of 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 its IPO or pursuant to an exercise of the Redemption Right or the Call Right (each as defined in the Solaris LLC Agreement) and additional tax basis arising from any payments Solaris Inc. makes under the Tax Receivable Agreement.
Tax Receivable Agreement As described in Note 10. “Income Taxes” under Part II, Item 8.
Tax Receivable Agreement As described in Note 15. “Income Taxes” under Part II, Item 8.
In projecting future taxable income, we consider our historical results and incorporate certain assumptions, including revenue growth and operating margins, among others. As of December 31, 2023 and 2022, we had $48.0 million and $55.4 million of deferred tax assets, respectively. See Note 10. “Income Taxes” under Part II, Item 8. “Financial Statements and Supplementary Data.” for additional information.
In projecting future taxable income, we consider our historical results and incorporate certain assumptions, including revenue growth and operating margins, among others. As of December 31, 2024 and 2023, we had $43.6 million and $48.0 million of net deferred tax assets, respectively. See Note 15. “Income Taxes” under Part II, Item 8. “Financial Statements and Supplementary Data.” for additional information.
The effective combined United States federal and state income tax rates were 16.8% and 18.9% for the year ended December 31, 2023 and 2022, respectively. The effective tax rate differed from the statutory rate primarily due to Solaris LLC’s treatment as a partnership for United States federal income tax purposes.
The effective combined United States federal and state income tax rates were 21.7% and 16.8% for the years ended December 31, 2024 and 2023, respectively. The effective tax rate differed from the statutory rate primarily due to Solaris LLC’s treatment as a partnership for United States federal income tax purposes.
Provision for Income Taxes During the year ended December 31, 2023, we recognized a combined United States federal and state expense for income taxes of $7.8 million, which is flat compared to the $7.8 million income tax expense we recognized during the year ended December 31, 2022.
Provision for Income Taxes During the year ended December 31, 2024, we recognized a combined United States federal and state expense for income taxes of $8.0 million, an increase of $0.2 million compared to the $7.8 million income tax expense we recognized during the year ended December 31, 2023.
Solaris LLC is treated as a partnership for United States federal income tax purposes and therefore does not pay federal income tax on its taxable income. Instead, the Solaris LLC members are liable for federal income tax on their respective shares of the Company’s taxable income reported on the members’ United States federal income tax returns.
Instead, the Solaris LLC members are liable for federal income tax on their respective shares of the Company’s taxable income reported on the members’ United States federal income tax returns.
Selling, General and Administrative Expenses Selling, general and administrative expenses, excluding depreciation and amortization, increased $3.9 million, or 17%, to $27.0 million for the year ended December 31, 2023 compared to $23.1 million for the year ended December 31, 2022. The increase is primarily due to increases in headcount and professional fees.
Selling, General and Administrative Expenses Selling, general and administrative expenses increased $8.7 million, or 32%, to $35.6 million for the year ended December 31, 2024 compared to $27.0 million for the year ended December 31, 2023. The increase is primarily due to increases in corporate headcount, professional fees and office rental expenses.
We made payments of $1.1 million in January 2023 under the Tax Receivable Agreement. Solaris LLC made a tax distribution to Solaris Inc. of $1.1 million in order to satisfy these obligations and concurrently made a cash distribution on a pro rata basis to each of the other members of Solaris LLC of $0.4 million.
In order to satisfy these obligations, Solaris LLC made a distribution to Solaris Inc. of $3.6 million and made a concurrent cash distribution of $1.1 million on a pro rata basis to each of the other members of Solaris LLC. Future amounts payable under the Tax Receivable Agreement are dependent upon future events. See Note 15.
We believe the following are the critical accounting policies used in the preparation of our combined financial statements, as well as the significant estimates and judgments affecting the application of these policies. This discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included in this report.
The following discussion highlights the critical accounting estimates that involve significant judgment and are integral to the preparation of our financial statements. This discussion should be read in conjunction with our consolidated financial statements and related notes included in this report.
Future sources and uses of cash Our material cash commitments consist primarily of obligations under our Credit Agreement, Tax Receivable Agreement, finance and operating leases for property and equipment, and purchase obligations as a part of normal operations.
Future Uses of Cash Our material cash commitments consist primarily of obligations under our debt financing, purchase commitments related to our power generation fleet growth program, obligations under the Tax Receivable Agreement, obligations under our finance and operating leases and purchase obligations as part of normal operations.
The projection of future taxable income involves estimates which require significant judgment. Actual taxable income may differ from our estimates, which could significantly impact the liability relating to the Tax Receivable Agreement. The Company accounts for amounts payable under the Tax Receivable Agreement in accordance with Accounting Standard Codification (“ASC”) Topic 450, Contingencies . Recent Accounting Pronouncements See Note 2.
The projection of future taxable income involves estimates which require significant judgment. Actual taxable income may differ from our estimates, which could significantly impact the liability relating to the Tax Receivable Agreement.
Future amounts payable under the Tax Receivable Agreement are dependent upon future events. See Note 10. “Income Taxes” under Item 8. “Financial Statements and Supplementary Data” for additional information regarding the Tax Receivable Agreement. See Note 7. “Leases” under Item 8. “Financial Statements and Supplementary Data” for additional information regarding scheduled maturities of finance and operating leases.
“Income Taxes” under Part II. Item 8. “Financial Statements and Supplementary Data” for additional information regarding the Tax Receivable Agreement. See Note 9. “Leases” under Part II, Item 8. “Financial Statements and Supplementary Data” for additional information regarding scheduled maturities of finance and operating leases. 46 Table of Contents ​ Off Balance Sheet Arrangements Refer to Note 17.
Income Taxes Solaris Inc. is a corporation and, as a result, is subject to United States federal, state and local income taxes. For the years ended December 31, 2023 and 2022 we recognized a combined United States federal and state expense for income taxes of $7.8 million.
For the years ended December 31, 2024 and 2023 we recognized a combined United States federal and state expense for income taxes of $8.0 million and $7.8 million, respectively. Solaris LLC is treated as a partnership for United States federal income tax purposes and therefore does not pay federal income tax on its taxable income.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Annual Report can be found in “Part II, Item 7. “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 .
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Annual Report can be found in Part II, Item 7.
These estimates include management’s short-term and long-term forecast of operating performance, including revenue growth rates and expected profitability margins, estimates of the remaining useful life and service potential of the assets, a discount rate based on our weighted average cost of capital, forecasted capital expenditures and the timing of expected future cash flows based on market conditions.
This process involves key assumptions, including management’s forecasts of future operating performance, such as revenue growth rates and expected profitability margins, estimates of the remaining useful life and service potential of the assets, and a discount rate based on our weighted average cost of capital. An impairment loss is recorded if the carrying amount exceeds the estimated fair value.
We conduct impairment tests on long-lived assets, other than goodwill, whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Key estimates relate to the fair value and recoverability of carrying values of long-lived assets, definite-lived intangible assets and goodwill.
Impairment of Long-Lived Assets and Goodwill Long-Lived Assets We evaluate the carrying value of long-lived assets, which consists of property, plant, and equipment, assets held for lease, definite-lived intangible assets and right-of-use lease assets, for impairment whenever events or changes in circumstances suggest that the carrying amount may not be recoverable.
Net cash used in financing activities of $16.1 million for the year ended December 31, 2022 was primarily related to dividends of $19.6 million, partially offset by net borrowings under the credit agreement of $8.0 million.
In comparison, net cash used in financing activities was $29.3 million for the year ended December 31, 2023. This was largely due to share repurchases of $26.4 million, dividends of $14.1 million to our Class A common stock shareholders, and $6.6 million in distributions to Solaris LLC unitholders, partially offset by net borrowings under the credit agreement of $22.0 million.
Cost of Services Cost of services, excluding depreciation and amortization expense, decreased $41.9 million, or 19%, to $177.8 million for the year ended December 31, 2023 compared to $219.8 million for the year ended December 31, 2022.
Solaris Logistics Solutions cost of revenue decreased $2.8 million, or 2%, to $175.0 million for the year ended December 31, 2024 compared to $177.8 million for the year ended December 31, 2023.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022: EBITDA and Adjusted EBITDA EBITDA increased $13.9 million to $86.1 million for the year ended December 31, 2023 compared to $72.2 million for the year ended December 31, 2022.
Other Operating Expense, Net Other operating expense increased $1.8 million, to $2.5 million for the year ended December 31, 2024 compared to $0.6 million for the year ended December 31, 2023.
Overview We design and manufacture specialized equipment, which combined with field technician support, last mile and mobilization logistics services and our software solutions, enables us to provide a service offering that helps oil and natural gas operators and their suppliers drive efficiencies that reduce operational footprint and costs during the completion phase of well development.
This segment was created following our recent acquisition of Mobile Energy Rentals LLC (“MER,” and such acquisition, the “MER Acquisition”). ● Solaris Logistics Solutions: This segment designs and manufactures specialized equipment that, when combined with field technician support, last mile and mobilization logistics services, and our software solutions, enables us to deliver comprehensive offerings that enhance efficiencies for oil and natural gas operators and their suppliers.
The decrease was primarily due to a decrease in last mile and mobilization logistics services activity, partially offset by increased systems costs in line with the increase in fully utilized systems discussed above. Cost of services as a percentage of revenue was 61% and 69% for the year ended December 31, 2023 and 2022, respectively.
This reduction was partially offset by a $6.1 million increase in last mile and ancillary service costs driven by an increase in last mile tonnage. 42 Table of Contents Solaris Logistics Solutions cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue was 64% and 61% for the years ended December 31, 2024 and 2023, respectively.
The increases in EBITDA and Adjusted EBITDA were primarily due to the changes in revenues and expenses, discussed above. 38 Table of Contents Liquidity and Capital Resources Overview Our primary sources of liquidity to date have been cash flows from operations, borrowings under our credit agreements and proceeds from equity offerings.
Liquidity and Capital Resources Overview Our primary sources of liquidity consist of cash flows from operations, borrowings under our debt financing agreements, available capacity from our revolving credit facility, and proceeds from opportunistic capital market offerings.
The following discussion contains “forward-looking statements” that reflect our plans, estimates, beliefs and expected performance.
“Management’s Discussion and Analysis of Financial Conditions and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on February 27, 2024. The following discussion contains “forward-looking statements” that reflect our plans, estimates, beliefs and expected performance.
“Summary of Significant Accounting Policies — Accounting Standards Recently Issued But Not Yet Adopted” under Item 8. “Financial Statements and Supplementary Data” for a discussion of recent accounting pronouncements. ​ 41 Table of Contents
The Company accounts for amounts payable under the Tax Receivable Agreement in accordance with Accounting Standard Codification (“ASC”) Topic 450, Contingencies . 48 Table of Contents Recent Accounting Pronouncements See Note 2. “Summary of Significant Accounting Policies — New Accounting Standards” under Part II. Item 8. “Financial Statements and Supplementary Data” for a discussion of recent accounting pronouncements. ​
Cash Flows The following table summarizes our cash flows for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Change ​ ​ 2023 ​ 2022 ​ 2023 vs. 2022 ​ ​ (in thousands) Net cash provided by operating activities $ 89,924 $ 67,996 ​ $ 21,928 Net cash used in investing activities ​ (62,003) ​ (79,539) ​ 17,536 Net cash used in financing activities ​ (30,923) ​ (16,119) ​ (14,804) Net change in cash ​ $ (3,002) ​ $ (27,662) ​ $ 24,660 ​ ​ Analysis of Cash Flow Changes for Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Operating Activities.
Cash Flows The following table summarizes our cash flows for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Change ​ ​ 2024 ​ 2023 ​ 2024 vs. 2023 ​ ​ (in thousands) Net cash provided by operating activities $ 59,367 $ 88,261 ​ $ (28,894) Net cash used in investing activities ​ (305,032) ​ (62,003) ​ (243,029) Net cash provided by (used in) financing activities ​ 399,699 ​ (29,260) ​ 428,959 Net change in cash ​ $ 154,034 ​ $ (3,002) ​ $ 157,036 ​ ​ 45 Table of Contents Significant Sources and Uses of Cash Flows Operating Activities.
Net cash provided by operating activities was $89.9 million for the year ended December 31, 2023, compared to net cash provided by operating activities of $68.0 million for the year ended December 31, 2022. The increase of $21.9 million in operating cash flow was primarily attributable to increased profitability from operations. Investing Activities .
This increase was partially offset by the absence of Solaris Logistics Solutions capital expenditures from our previous growth capital program in 2023. Financing Activities. For the year ended December 31, 2024, net cash provided by financing activities totaled $400.0 million.
Other operating expense in the year ended December 31, 2022 primarily relate to loss on disposal of assets, change in the TRA liability, credit losses, gain on insurance claims and other settlements, and costs related to the evaluation of potential acquisitions.
Other operating expense for the year ended December 31, 2024 primarily relate to acquisition-related costs, partially offset by gain from change in payables related to the Tax Receivable Agreement and sublease income on an office lease.
Removed
We service most active oil and natural gas basins in the United States. Recent Trends and Outlook Demand for our services is predominantly influenced by the level of oil and natural gas well drilling and completion activity in the U.S. During 2023, U.S. drilling and completion activity, as measured by the Baker Hughes U.S.
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Executive Overview We provide mobile and scalable equipment-based solutions for use in distributed power generation as well as the management of raw materials used in the completion of oil and natural gas wells. Headquartered in Houston, Texas, Solaris serves multiple U.S. end markets, including energy, data centers, and other commercial and industrial sectors.
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Land Rig Count, declined 5% on a full year average basis and over 20% from the start to the end of the year. This activity decline was primarily driven by a decrease in commodity prices. Average WTI oil prices declined over 20% from the mid-$90s per barrel range in 2022 to the mid-$70s per barrel range in 2023.
Added
We operate through two reportable business segments: ● Solaris Power Solutions: This segment offers configurable all-electric natural gas-powered mobile turbines and ancillary equipment. We lease this equipment to data center, energy, and other commercial and industrial sector customers.
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Average Henry Hub natural gas prices remained in a range between $2 and $3 per MMBtu for most of 2023, which reflected a 50-70% decrease from price levels in 2022.
Added
On September 11, 2024, we acquired MER, a company providing configurable, primarily natural gas-powered mobile turbines and ancillary equipment across energy, data center, and other commercial and industrial markets.
Removed
During 2023, our fully utilized total system count grew from 95 systems for the year ended December 31, 2022 to 109 systems for the year ended December 31, 2023 outpacing the Baker Hughes rig count trend due primarily to new technology-led growth with new and existing customers.
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This acquisition marks our entry into the scaled distributed power solutions market, strengthening our position as a mobile equipment and logistics solution provider in the oil and gas sector while diversifying our overall business. Recent Developments MER Acquisition We successfully completed the acquisition of MER on September 11, 2024.
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An increase in pricing at the start of 2023 and incremental earnings from our new services also allowed us to grow earnings despite a decline in drilling and completion activity during the year. As a result, our operating profit grew over 19% despite the industry activity decline.
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The results of MER’s operations have been included in our consolidated financial statements from the acquisition date through December 31, 2024. For further details regarding the acquisition, please refer to Note 3. “MER Acquisition” in the notes to our consolidated financial statements.
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In 2024, we expect the Company’s revenue and profitability to track closer to the overall direction of U.S. drilling and completion activity. Oil prices currently remain in the mid-$70s per barrel range in 2024, which we believe should support a sustained level of oil-directed U.S. drilling and completion activity.
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Debt Financing On September 11, 2024, we entered into a senior secured term loan agreement (the “Term Loan Agreement”) totaling $325.0 million, primarily to fund the acquisition of MER. The remaining proceeds are restricted for capital expenditures to support our growth initiatives. The senior secured term loan bears a variable interest rate with interest payments that began in October 2024.
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Today oil-directed drilling activity comprises approximately 80% of the total Baker Hughes U.S. Land rig count. Our 2023 capital expenditures of approximately $64 million were down compared to full year 2022. Following the completion of our prior growth capital program in 2023, capital expenditure spending is expected to decline.
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Repayments of 1.25% of the original principal amount are due in quarterly installments beginning on September 30, 2025. The term loan matures on September 11, 2029. Additionally, on the same day, we extinguished our prior revolving credit facility using a portion of the term loan proceeds.
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The Company expects full year 2024 capital expenditures to be below $15 million, which reflects an over 75% decrease from total capital expenditures in 2023. This reduction in capital expenditures combined with a relatively stable market should allow us to generate significantly increased cash flow in 2024.
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On October 2, 2024, we established a new revolving credit facility that allows for borrowings up to $75.0 million, with a potential increase of up to an additional $50.0 million, contingent on certain conditions. This facility also includes provisions for up to $10.0 million in letters of credit. For further details regarding our debt agreements, please refer to Note 10.
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The sustainability of favorable supply-demand dynamics and a strong commodity environment will depend on multiple factors, including any supply chain disruptions, potential regulatory changes, uncertainty around a potential economic slowdown and potential impacts from geopolitical disruptions, including the war in Ukraine and the Israel and Hamas conflict.
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“Debt” in the notes to our consolidated financial statements. Class A Common Stock Offering On December 11, 2024, we completed an underwritten public offering in which we sold 6,500,000 shares of our Class A common stock, par value of $0.01 per share at a price of $24.75 per share.
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Additionally, consolidation can drive procurement strategy changes, which has historically resulted in both market share gains and losses for the Company.
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After deducting underwriting 40 Table of Contents discounts and commissions of $4.8 million, we received net proceeds of approximately $156.0 million. These net proceeds are being used, and are expected to continue to be used, to fund growth capital for additional power generation equipment.
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We expect both consolidation and financial discipline will likely continue to be important themes for the energy industry going forward. 35 Table of Contents Results of Operations Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ 2023 2022 Change ​ ​ (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenue ​ $ 292,947 ​ $ 320,005 ​ $ (27,058) Operating costs and expenses: ​ ​ ​ ​ Cost of services (excluding depreciation) ​ ​ 177,847 ​ ​ 219,775 ​ ​ (41,928) Depreciation and amortization ​ 36,185 ​ 30,433 ​ 5,752 Property tax contingency ​ ​ — ​ ​ 3,072 ​ ​ (3,072) Selling, general and administrative ​ 26,951 ​ 23,074 ​ 3,877 Impairment losses ​ ​ 1,423 ​ ​ — ​ ​ 1,423 Other operating expense, net ​ ​ 639 ​ ​ 1,847 ​ ​ (1,208) Total operating costs and expenses ​ 243,045 ​ 278,201 ​ (35,156) Operating income ​ 49,902 ​ 41,804 ​ 8,098 Interest expense, net ​ (3,307) ​ (489) ​ (2,818) Total other expense ​ (3,307) ​ (489) ​ (2,818) Income before income tax expense ​ 46,595 ​ 41,315 ​ 5,280 Provision for income taxes ​ (7,820) ​ (7,803) ​ (17) Net income ​ ​ 38,775 ​ ​ 33,512 ​ ​ 5,263 Less: net income related to non-controlling interests ​ ​ (14,439) ​ ​ (12,354) ​ ​ (2,085) Net income attributable to Solaris ​ $ 24,336 ​ $ 21,158 ​ $ 3,178 ​ Revenue Revenue decreased $27.1 million, or 8%, to $292.9 million for the year ended December 31, 2023 compared to $320.0 million for the year ended December 31, 2022.
Added
Market Trends and Outlook Demand for our services varies across each of our business segments, Solaris Power Solutions and Solaris Logistics Solutions, due to differences in end market exposure.
Removed
Revenue decreased mainly due to a decrease in last mile logistics services activity. The decrease in revenue was partially offset by an increase in fully utilized systems and increased pricing.
Added
For the Company’s Solaris Power Solutions segment, demand is predominantly influenced by accelerating needs for power in the U.S., juxtaposed against constrained electrical grid infrastructure, which is due to a number of factors including, but not limited to, aging transmission and distribution networks, extreme weather, and long lead times for various electric infrastructure equipment.
Removed
As our new technology introductions allowed us to provide more systems per location serviced, total fully utilized systems increased from 95 systems for the year ended December 31, 2022 to 109 systems for the year ended December 31, 2023.
Added
Solaris’s turbine offerings are configurable and can be scaled to match power demand on a “behind-the-meter” basis in a shorter timeline than many grid-based providers can service. Today, the Company’s Solaris Power Solutions segment’s primary customers include a large data center and several energy companies requiring power for hydrocarbon production, processing, transportation, and refining applications.
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Property Tax Contingency We are subject to a number of state and local taxes that are not income-based. As many of these taxes are subject to assessment and audit by the taxing authorities, it is possible that an assessment or audit could result in additional taxes due.
Added
Power demand for data centers has been accelerated due to growth in generative artificial intelligence (“AI”) computing applications. Power demand for energy customers is primarily driven by hydrocarbon production and processing operations in geographies where grid infrastructure may not be available or reliable or is prone to supply disruption.
Removed
We accrue for additional taxes when we determine that it is probable that we will have incurred a liability and we can reasonably estimate the amount of the liability. On June 16, 2022, Cause Number CV20-09-372, styled Solaris Oilfield Site Services v. Brown County Appraisal District, was presented to the 35th District Court of Brown County, Texas.
Added
Many of our customers face multi-year delays to receive grid-based power and are turning to configurable, “behind-the-meter” solutions such as ours to bridge this gap. The availability of low-cost fuel as a result of the abundant supply of natural gas domestically enhances the cost-competitiveness of our mobile natural gas-powered turbine technology as compared to conventional grid-based power.
Removed
The 35th District Court of Brown County ruled in favor of Brown County Appraisal District regarding the disqualification of our equipment for certain property tax exemptions. On July 20, 2022, we filed an appeal with the Eleventh District of Texas – Eastland Court of Appeals, and an appellate hearing relating thereto was held on April 13, 2023.
Added
Our Solaris Power Solutions segment began upon the consummation of the MER Acquisition on September 11, 2024. As a result, our fourth quarter was the first full quarter of contribution from this segment. During the fourth quarter, Solaris Power Solutions generated revenue from an average of approximately 260 megawatts (“MW”) of generation capacity.
Removed
We anticipate that a final ruling from the Eastland Court of Appeals will be delivered sometime in the first half of 2024. In connection 36 Table of Contents therewith, we have recognized $3.1 million in Accrued Liabilities as of December 31, 2023. No additional contingencies were recognized during the year ended December 31, 2023.
Added
Due to the continued market demand we forecast for behind-the-meter power generation, Solaris Power Solutions has secured deliveries for turbines and ancillary equipment that will significantly increase our operated power generation fleet to approximately 1,400 MW by the first half of 2027.
Removed
If this litigation is ultimately resolved against us, in whole or in part, it is possible that the resolution of this matter could be material to our consolidated results of operations or cash flows.
Added
The Company estimates approximately two thirds of total expected delivered capacity is currently committed to customers under commercial agreements that range in tenor from two to six years.
Removed
Impairment of Fixed Assets During the year ended December 31, 2023, we entered into a non-binding sale agreement with a third party to sell certain fixed assets. These fixed assets met the criteria as assets held for sale and are included as such on the consolidated balance sheet as of December 31, 2023.
Added
Each of these commercial agreements include distinct product specifications, such as product type, quantity, delivery period, and price, as well as standard terms and conditions with respect to acceptance, delivery, transportation, inspection, assignment, taxes and performance failure. We expect total company capital expenditures in 2025 of approximately $690 million.
Removed
As the carrying value of the fixed assets classified as held for sale exceeded their fair value less estimated costs to sell, we recorded an impairment loss of $1.4 million in the consolidated statement of operations for the year ended December 31, 2023.
Added
The majority of these capital expenditures are to support Solaris Power Solutions capital growth, with capital expenditures for Solaris Logistics Solutions representing approximately $10-15 million of our total expected capital expenditures over the next year.
Removed
Interest Expense, Net Interest expense increased $2.8 million, or 560%, to $3.3 million for the year ended December 31, 2023 compared to $0.5 million for the year ended December 31, 2022. The increase was primarily due to an increase in average borrowings outstanding and effective interest rates on the senior secured credit facility.
Added
The majority of these capital expenditures are already reflected in committed purchase orders, and we are relying on our ability to secure appropriate financing to fund these commitments.
Removed
Comparison of Non-GAAP Financial Measures We view EBITDA and Adjusted EBITDA as important indicators of performance.
Added
We intend to fund our current planned capital expenditures with available cash on our balance sheet as of December 31, 2024, cash flows we expect to generate from operations in 2025, and available capacity from our revolving credit facility.
Removed
We use them to assess our results of operations because it allows us, our investors and our lenders to compare our operating performance on a consistent basis across periods by removing the effects of varying levels of interest expense due to our capital structure, depreciation and amortization due to our asset base and other items that impact the comparability of financial results from period to period.
Added
Additionally, while no assurance can be given, we may seek to issue additional securities through opportunistic capital market transactions, depending upon market conditions, and / or enter into additional debt financing agreements.
Removed
We present EBITDA and Adjusted EBITDA because we believe they provide useful information regarding trends and other factors affecting our business in addition to measures calculated under generally accepted accounting principles in the United States (“GAAP”). We define EBITDA as net income, plus (i) depreciation and amortization expense, (ii) interest expense and (iii) income tax expense, including franchise taxes.
Added
Even if we are unable to secure the financing of our planned capital expenditures, we have the ability to pay cancellation fees for these committed purchase orders using cash from our balance sheet, cash flows from operations in 2025 and available capacity under our revolving credit facility.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Removed
We do not currently intend to hedge our indirect exposure to commodity price risk. Interest Rate Risk We are subject to interest rate risk on a portion of our long-term debt under the Credit Agreement. At December 31, 2023, we had $30.0 million of debt outstanding, with a weighted average interest rate of 8.38%.
Added
We do not currently intend to hedge our indirect exposure to commodity price risk. Interest Rate Risk We are exposed to market risk from fluctuations in interest rates associated with our variable-rate borrowings under debt financing agreements. Changes in interest rates directly affect our interest expense.
Removed
Interest is calculated under the terms of our Credit Agreement based on our selection, from time to time, of one of the index rates available to us plus an applicable margin that varies based on certain factors. See Note 8. “Senior Secured Credit Facility” under Item 8. “Financial Statements and Supplementary Data” for further discussion.
Added
Borrowings under our Term Loan Agreement are subject to a variable interest rate that, at Solaris’s option, is determined by either Term SOFR plus an applicable margin or the Base Rate (as defined in the Term Loan Agreement) plus an applicable margin.
Removed
Assuming no change in the amount outstanding, the impact on interest expense of a 1% increase or decrease in the weighted average interest rate would be approximately $0.3 million per year. We do not currently have or intend to enter into any derivative arrangements to protect against fluctuations in interest rates applicable to our outstanding indebtedness.
Added
The applicable margin is 5% for Base Rate loans and 6.0% for Term SOFR loans, subject to adjustments of up to an additional 0.25% based on Solaris’s then-current leverage ratio if certain conditions are not met. As of December 31, 2024, we had outstanding borrowings of $325.0 million under the Term Loan Agreement.
Removed
Credit Risk The majority of our accounts receivable have payment terms of 60 days or less. As of December 31, 2023, two customers accounted for 12% and 10% of our total accounts receivable.
Added
A hypothetical increase or decrease of 100 basis points in our variable interest rates would result in an estimated annual change in interest expense of approximately $3.3 million. ​ 49 Table of Contents
Removed
A concentration of counterparties operating in the oil and natural gas industry may increase our overall exposure to credit risk in that the counterparties may be similarly affected by changes in economic, regulatory or other conditions. If a customer defaults, our gross profit and cash flows may be adversely affected.
Removed
We mitigate the associated credit risk by performing credit evaluations, monitoring the payment patterns of our customers, and pursuing legal remedies, such as the filing of liens, when applicable. ​ 42 Table of Contents

Other SEI 10-K year-over-year comparisons