What changed in Solaris Energy Infrastructure, Inc.'s 2023 10-K compared to 2022?

Across the narrative sections we track, Solaris Energy Infrastructure, Inc. (SEI) added 257 paragraphs, removed 195, and edited 153 between the 2022 and 2023 10-K filings. The biggest movers are Item 1. Business (+104/−45), Item 1A. Risk Factors (+78/−73), Item 7. Management's Discussion & Analysis (+62/−63).

Did Solaris Energy Infrastructure, Inc. add new Risk Factors in the 2023 10-K?

Yes — Item 1A Risk Factors shows 78 new/edited paragraphs and 73 removed paragraphs versus the 2022 10-K.

What changed in Solaris Energy Infrastructure, Inc.'s MD&A (Item 7) in 2023?

Item 7 Management's Discussion & Analysis shows 62 new/edited paragraphs and 63 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Where does this SEI 10-K diff come from?

The source filings are Solaris Energy Infrastructure, Inc.'s official 2022 and 2023 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

What changed in Solaris Energy Infrastructure, Inc.'s 10-K — 2022 vs 2023

Paragraph-level year-over-year comparison of Solaris Energy Infrastructure, Inc.'s 2022 and 2023 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 2023 report.

+257 added−195 removedSource: 10-K (2024-02-27) vs 10-K (2023-03-09)

Top changes in Solaris Energy Infrastructure, Inc.'s 2023 10-K

257 paragraphs added · 195 removed · 153 edited across 6 sections

Item 1. Business+104 / −45 · 34 edited
Item 1A. Risk Factors+78 / −73 · 64 edited
Item 7. Management's Discussion & Analysis+62 / −63 · 43 edited
Item 5. Market for Registrant's Common Equity+8 / −9 · 7 edited
Item 7A. Quantitative and Qualitative Disclosures About Market Risk+4 / −4 · 4 edited

Item 1. Business

Business — how the company describes what it does

34 edited+70 added−11 removed57 unchanged

2022 filing

2023 filing

Biggest changeTo protect our employees, contractors, and 6 Table of Contents 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.

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.

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 Table of Contents (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.

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.

“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 our 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.

“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.

We design and manufacture specialized equipment, which combined with field technician support, last mile 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.

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.

The impacts of these orders, pledges, agreements and any legislation or regulation promulgated to fulfill the United States’ commitments under the Paris Agreement, COP26, or other international conventions cannot be predicted at this time.

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.

Notwithstanding these recent 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, further administrative and regulatory restrictions may be adopted by the Biden Administration that could restrict hydraulic fracturing activities on federal lands and waters.

For more information, see our Risk Factor titled “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.” Separately, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions.

For more information, see our Risk Factor titled “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.” Separately, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, climate-related disclosure requirements, carbon taxes, reporting and tracking programs, climate-related disclosure requirements, and restriction of emissions.

Our issued patents expire between 2032 and 2041, 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 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.

In January 2021, President Biden issued an executive order calling on the EPA to revisit federal regulations regarding methane and establish new or more stringent standards for existing or new sources in the oil and gas sector. U.S.

Moreover, the international community gathered again in Glasgow in November 2021 at the 26th Conference of the Parties (“COP26”), during which multiple 9 Table of Contents announcements (not having the effect of law) were made, including a call for parties to eliminate certain fossil fuel subsidies and pursue further action on non-CO2 GHGs.

Moreover, the international community gathered again in Glasgow in November 2021 at the 26th Conference of the Parties (“COP26”), during which multiple announcements (not having the effect of law) were made, including a call for parties to eliminate certain fossil fuel subsidies and pursue further action on non-CO2 GHGs.

Moreover, states may issue orders to temporarily shut down or to curtail the injection depth of existing wells in the vicinity of seismic events, as was the case in 2021 and 2022 in the Permian Basin of Texas and has been the case over the past several years in central Oklahoma.

Moreover, states may issue orders to temporarily shut down or to curtail the injection depth of existing wells in the vicinity of seismic events, as was the case in recent years in the Permian Basin of Texas and has been the case over the past several years in central Oklahoma.

In addition, we rely to a great extent on the technical expertise and know-how of our personnel to maintain our competitive position, and we take commercially 11 Table of Contents reasonable measures to protect trade secrets and other confidential and/or proprietary information relating to the technologies we develop.

In addition, we rely to a great extent on the technical expertise and know-how of our personnel to maintain our competitive position, and we take commercially reasonable measures to protect trade secrets and other confidential and/or proprietary information relating to the technologies we develop.

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) Ground-Level Ozone Standards .

However, several groups have filed litigation over this December 2020 decision, and the Biden Administration has announced plans to reconsider the December 2020 final action in favor of a more stringent ground-level ozone NAAQS.

We seek to identify qualified internal and external talent for our organization, enabling us to execute on our strategic objectives. As of December 31, 2022, we employed 344 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 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 do not currently have long-term agreements with third-party trucking suppliers and could experience shortages and price increases in the future. 5 Table of Contents 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.

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.

In response to these concerns, regulators in some of the states in which our customers operate have adopted additional requirements related to seismicity and its 8 Table of Contents potential association with hydraulic fracturing.

In response to these concerns, regulators in some of the states in which our customers operate have adopted additional requirements related to seismicity and its potential association with hydraulic fracturing.

Our principal executive offices are located at 9811 Katy Freeway, Suite 700, 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.solarisoilfield.com.

We manage and report our operations as a single business. Our fleet has grown from consisting of our legacy mobile proppant management systems to multiple types of all-electric, automated equipment designed to efficiently store, move and blend sand and fluids on the low pressure side of well completion sites.

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.

Our equipment and services are deployed across active oil and natural gas basins in the United States. We believe our continual product 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.

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.

We believe that the principal competitive factors in the markets we serve are equipment reliability, technical expertise, patented-protected technology, unique services offerings, equipment capacity, transportation and storage, work force competency, efficiency, safety record, reputation, experience and price.

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.

As of December 31, 2022, we had six issued patents in the United States, eight corollary patents issued in Canada and two corollary patents issued in Mexico; four pending utility patent applications in the United States, one in Canada, and two in Mexico. Each patent and patent application relates to our systems, services and other technologies.

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.

To the extent the rules impose additional reporting obligations, we and our customers could incur increased costs. Furthermore, the SEC proposed rules that, amongst other matters, will require climate-related disclosures from registrants, including data on Scope 1 and 2 and, in some cases, Scope 3 GHG emissions.

Securities and Exchange Commission (the “SEC”) has also announced that it is scrutinizing existing 10 Table of Contents climate-change related disclosures in public filings, increasing the potential for enforcement if the SEC was to allege that an issuer’s existing climate disclosures were misleading or deficient.

Securities and Exchange Commission (the “SEC”) has also announced from time to time that it may apply additional scrutiny to existing climate-change related disclosures in public filings, increasing the potential for enforcement if the SEC was to allege that an issuer’s existing climate disclosures were misleading or deficient.

In response to President Biden’s executive order, in November 2021, the EPA issued a proposed rule that, if finalized, would establish Quad Ob new source and Quad Oc first-time existing source standards of performance for methane and volatile organic compound emissions in the crude oil and natural gas source category.

In response to President Biden’s executive order, in December 2023, the EPA issued a final rule that established Quad Ob more stringent new source and Quad Oc first-time existing source standards of performance for methane and volatile organic compound emissions in the crude oil and natural gas source category.

Generally, the MSAs govern the relationship with our customers with specific work performed under individual work orders. For the years ended December 31, 2022 and 2021, Liberty Oilfield Services, LLC accounted for approximately 22% and 26%, respectively, of our total revenue. Competition The oil and natural gas services industry is highly competitive.

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.

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.

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 value people above all else and remain committed to making their safety and health our top priority.

Health and Safety Safety is a core value of ours and begins with the protection of our employees. We value people above all else and remain committed to making their safety and health our top priority.

The proposal is expected to be finalized in 2023. Additionally, in August 2022 the Inflation Reduction Act was passed, which imposes the first ever federal methane fee on certain oil and gas operations.

Additionally, in August 2022 the Inflation Reduction Act was passed, which imposes the first ever federal methane fee on certain oil and gas operations, the first payments for which will be due 2024 for emissions over certain thresholds in calendar year 2023.

This proposed rule would apply to upstream and midstream facilities at oil and natural gas well sites, natural gas gathering and boosting compressor stations, natural gas processing plants, and transmission and storage facilities.

This rule would apply to upstream and midstream facilities at oil and natural gas well sites, natural gas gathering and boosting compressor stations, natural gas processing plants, and transmission and storage facilities. Under the final rule, states will have two years to prepare and submit their plans to impose methane emission controls on existing sources.

During the years ended December 31, 2022 and 2021, no supplier accounted for more than 10% of our total spending. To date, we have been able to obtain the third party-trucking services necessary to support our operations on a timely basis.

To date, we have been able to obtain the third party-trucking services necessary to support our operations on a timely basis.

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.

Our employee demographic profile allows us to promote inclusion of thought, skill, knowledge, and culture across our operations to achieve our social obligations, commitments and to drive enhanced decision making and execution for the business. We are proud of the diversity of our workforce and promote inclusion at all levels of our organization.

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.

Our Properties We own or lease various facilities including our corporate headquarters in Houston, Texas, manufacturing facility in Early, Texas and a transloading facility in Kingfisher, Oklahoma. 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.

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.

Removed

The number of our mobile proppant management systems fully utilized has been our traditional measure of activity, as historically one mobile proppant management system would follow one hydraulic fracturing (frac) crew, on average.

Added

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.

Removed

While we still use this metric as an important measure of our activity today, we have expanded our revenue sources through new technology and offerings that work in conjunction with our legacy systems, including our turnkey last mile logistics management services, our proprietary top fill equipment to enable quick unloading from bottom drop trucks, our AutoBlend™ integrated electric blender, our fluid management systems and our proprietary Solaris Lens® software.

Added

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.

Removed

We consider our employee relations to be good. Diversity and Inclusion We are committed to fostering a work environment in which all employees treat each other with dignity and respect and are continually striving to attract a diverse workforce.

Added

We are proud of the diversity of our workforce and the inclusion of our employees at all levels of our organization.

Removed

As of December 31, 2022: (1) Females represented approximately 13% of our organization and 23% of supervisory or managerial roles. (2) Minorities represented 41% of our organization and 23% of supervisory or managerial roles. Health and Safety Safety is a core value of ours and begins with the protection of our employees.

Added

As of December 31, 2023: • 22% of our supervisory or managerial roles were filled by women; • 14% of our total workforce consisted of women; • 25% of our supervisory or managerial roles were filled by racially or ethnically diverse individuals; and • 38% of our total workforce was racially or ethnically diverse.

Removed

With respect to COVID-19, the safety of our employees is our top priority, and we will continue to operate in accordance with federal and state health guidelines and safety protocols. We implemented several policies and provided employee training to help maintain the health and safety of our workforce.

Added

For example, the Bureau of Land Management has recently proposed a rule to update the fiscal terms of federal oil and gas leases, which, if finalized as proposed, would increase the costs associated with such leases and add additional criteria for the Bureau of Land Management to consider when deciding whether to lease nominated land.

Removed

Working remotely and under our revised policies has not impacted our ability to maintain operations or caused us to incur significant additional expenses; however, we are unable to predict the duration or ultimate impact of COVID-19 on our business or operations.

Added

The rule’s requirements are generally the same for both new and existing sources. The rule revises requirements for fugitive emissions monitoring and repair and establishes a “super-emitter” response program to timely mitigate emissions events as detected by governmental agencies or qualified third parties, triggering certain investigation and repair requirements.

Removed

Recruiting and Turnover In order to recruit and maintain a workforce that is high-quality and diverse, 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.

Added

At the 28th Conference of the Parties (“COP28”) in 2023, the parties signed onto an agreement to transition away from 9 Table of Contents fossil fuels in energy systems and increase renewable energy capacity, though no timeline for doing so was set.

Removed

Congress also passed, and President Biden signed into law, a revocation of the Trump Administration’s 2020 rulemaking in respect of these standards and effectively reinstating the Obama Administration’s 2016 standards.

Added

While this suspension was halted by legal action in 2022, the Biden Administration may pursue other measures, such as more restrictive requirements for the establishment of pipeline infrastructure or the permitting of liquefied natural gas export facilities.

Removed

The EPA published a supplemental proposal in November 2022, which, among other items, sets forth specific provisions strengthening the first nationwide emissions guidelines for states to limit methane emissions from existing oil and natural gas facilities, revises requirements for fugitive emissions monitoring and repair and establishes a “super-emitter” response program to timely mitigate emissions events.

Added

For example, in January 2024, the Biden Administration announced a temporary pause on pending decisions on new exports of liquefied natural gas to countries that the United States does not have free trade agreements with, pending Department of Energy review of the underlying analyses for such authorizations.

Removed

The suspension of the federal leasing activities prompted legal action by several states against the Biden Administration, resulting in issuance of a nationwide permanent injunction by a federal district judge in Louisiana in August 2022, effectively halting implementation of the leasing suspension.

Added

Enhanced climate-related disclosure requirements could increase operating costs and lead to reputational or other harm with customers, regulators, or other stakeholders to the extent that our disclosures do not meet their own standards or expectations.

Removed

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.

Added

Consequently, we are also exposed to increased litigation risks relating to alleged climate-related damages resulting from our operations, statements alleged to have been made by 10 Table of Contents us or others in our industry regarding climate change risks, or in connecting with any future disclosures we may make regarding reported emissions, particularly given the inherent uncertainties and estimation required with respect to calculating and reporting GHG emissions.

Added

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 February 27, 2024. 12 Table of Contents William A.

Added

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.

Added

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.

Added

(“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.

Added

Prior to founding our predecessor, in January 2013 Mr. Zartler founded Solaris Energy Capital, LLC, a private investment firm focused on investing in and managing emerging, high growth potential businesses primarily in midstream energy and oilfield services, including Solaris LLC, and Mr.

Added

Zartler continues to serve as the sole member and manager of Solaris Energy Capital, LLC, a related party of the Company. Prior to founding Solaris Energy Capital, LLC, Mr. Zartler was a founder and Managing Partner of Denham Capital Management (“Denham”), a $7 billion global energy and commodities private equity firm, from its inception in 2004 to January 2013. Mr.

Added

Zartler led Denham’s global investing activity in the midstream and oilfield services sectors and served on the firm’s Investment and Executive Committees. Previously, Mr. Zartler held the role of Senior Vice President and General Manager at Dynegy Inc., building and managing the natural gas liquids business. Mr.

Added

Zartler also served as a director of the general partner of NGL Partners LP (NYSE: NGL) from its inception in September 2012 to August 2013. Mr. Zartler began his career at Dow Hydrocarbons and Resources. Mr.

Added

Zartler received a Bachelor of Science in Mechanical Engineering from the University of Texas at Austin and a Master of Business Administration from Texas A&M University. Mr. Zartler serves on the Engineering Advisory Board of the Cockrell School of Engineering at the University of Texas at Austin. Laurie H.

Added

Argo , 52, has served as a member of the Board since March 2022. Ms. Argo became a member of the board of directors of the general partner of Viper Energy (NASDAQ: VNOM) effective January 1, 2023. Ms.

Added

Argo served on the board of the general partner of Ratter Midstream, LP (NASDAQ: RTLR) as well as the Audit and Conflicts Committees, from May 2019 until August 2023, at which time Rattler was acquired by Diamondback Energy. From August 2018 through June 2021, Ms.

Added

Argo served as a director on the board of EVRAZ plc (EVR.L), a multinational, vertically integrated steel making and mining company and was a member of the Audit Committee and the Remuneration Committee. Since October 2017, Ms. Argo has performed consulting services for clients within the energy industry. From March 2005 until September 2017, Ms.

Added

Argo served in various capacities of leadership and senior management within Enterprise Products Holdings LLC, the general partner of Enterprise Products Partners L.P., a midstream natural gas and crude oil pipeline company, including as Senior Vice President and President and Chief Executive Officer of OTLP GP, LLC, the general partner of Oiltanking Partners, L.P., an affiliate of Enterprise Products Partners L.P.

Added

From 2001 to 2004, Ms. Argo worked for San Diego Gas and Electric Company in San Diego, California and PG&E Gas Transmission, a subsidiary of PG&E Corporation, in Houston, Texas from 1997 to 2000. Ms. Argo earned an MBA from National University in La Jolla, California and graduated from St. Edward’s University in Austin, Texas with a degree in accounting.

Added

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.

Added

Burke , 86, 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 and currently serves as Chairman of our Nominating & Governance Committee. From July 2013 until January 2018 Mr.

Added

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.

Added

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.

Added

(“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.

Added

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.

Added

Durrett was previously our Vice President of Business Operations from October 2014 to February 2017 and the Vice President of Business Operations of Solaris Energy Capital, LLC from October 2013 to September 2014, a related party of the Company. From July 2013 to September 2013, Ms. Durrett served as an independent consultant in the proppant industry.

Added

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.

Added

Durrett began her career at Ferrell North America, where she managed operations for the energy commodities trading business, including natural gas liquids and refined products. Ms. Durrett received a Bachelor of Science in Business Administration from Park University in Kansas City, Missouri, where she graduated with distinction. Edgar R.

Added

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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

64 edited+14 added−9 removed142 unchanged

2022 filing

2023 filing

Biggest changeHolders 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, and the members of Solaris LLC immediately prior to the IPO (collectively, the “Original Investors”) own a substantial majority of our Class B common stock, which represents approximately 30% of our combined economic interest and voting power.

Biggest changeOur 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.

Please see "—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 amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.

Please see “—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 amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.

If we were to undergo an ownership change, some or all of our U.S. federal NOLs could expire before they can be used. In addition, future ownership changes or changes to the U.S. tax laws could limit our ability to utilize our NOLs.

If we were to undergo an ownership change, some of our U.S. federal NOLs could expire before they can be used. In addition, future ownership changes or changes to the U.S. tax laws could limit our ability to utilize our NOLs.

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. 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 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.

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.

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 25 Table of Contents 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.

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.

“Financial Statements and 23 Table of Contents Supplementary Data.” The term of the Tax Receivable Agreement will continue until all tax benefits that are subject to the Tax Receivable Agreement have been utilized or expired, unless Solaris Inc. exercises its right to terminate the Tax Receivable Agreement (or the Tax Receivable Agreement is terminated due to other circumstances, including Solaris Inc.’s breach of a material obligation thereunder or certain mergers, asset sales or other forms of business combinations or other changes of control), and Solaris Inc. makes the termination payment specified in the Tax Receivable Agreement.

“Financial Statements and Supplementary Data.” The term of the Tax Receivable Agreement will continue until all tax benefits that are subject to the Tax Receivable Agreement have been utilized or expired, unless Solaris Inc. exercises its right to terminate the Tax Receivable Agreement (or the Tax Receivable Agreement is terminated due to other circumstances, including Solaris Inc.’s breach of a material obligation thereunder or certain mergers, asset sales or other forms of business combinations or other changes of control), and Solaris Inc. makes the termination payment specified in the Tax Receivable Agreement.

Although the Original Investors are entitled to act separately in their own respective interests with respect to their ownership in us, if the Original Investors choose to act in concert, they will together have the ability to strongly influence the election of the members of our board of directors, and thereby our management and affairs.

Although our largest investors are entitled to act separately in their own respective interests with respect to their ownership in us, if they choose to act in concert, they will together have the ability to strongly influence the election of the members of our board of directors, and thereby our management and affairs.

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. 17 Table of Contents 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 Credit Agreement subjects us to various financial and other restrictive covenants.

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.

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.

Events outside of our control, including a pandemic or outbreak of an infectious disease, political unrest and economic recessions occurring around the globe, could materially adversely affect our business, liquidity, results of operations and financial condition.

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.

Additionally, alternative transportation methods for transporting and delivering proppant or chemicals to the well site could make our product offerings and services less attractive than those of our competitors and affect our results of operations. 13 Table of Contents Our business is subject to inherent risks some of which are beyond our control such as disasters and extreme or seasonal weather events.

Additionally, alternative transportation methods for transporting and delivering proppant or chemicals to the well site could make our product offerings and services less attractive than those of our competitors and affect our results of operations. Our business is subject to inherent risks some of which are beyond our control such as disasters and extreme or seasonal weather events.

As a public company, we need to comply with laws, regulations and requirements, certain corporate governance provisions of the Sarbanes-Oxley Act of 2022 (the “Sarbanes-Oxley Act”) and related regulations of the SEC and the requirements of the New York Stock Exchange (the “NYSE”).

As a public company, we need to comply with laws, regulations and requirements, certain corporate governance provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and related regulations of the SEC and the requirements of the New York Stock Exchange (the “NYSE”).

If we are unable to remediate the material weakness, or are otherwise unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and adversely impact our stock price.

If we are unable to remediate the development of new material weaknesses in internal control, or are otherwise unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and adversely impact our stock price.

For additional discussion of our 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 13. “Related Party Transactions” under Part II, Item 8.

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.

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.

Our operations and the operations of our customers are subject to stringent federal, tribal, state and local laws and regulations governing worker health and safety, protection of the environment, including natural resources, endangered 18 Table of Contents or threatened species or their habitat and migratory birds, and the management, transportation and disposal of wastes and other materials.

Our operations and the operations of our customers are subject to stringent federal, tribal, state and local laws and regulations governing worker health and safety, protection of the environment, including natural resources, endangered or threatened species or their habitat and migratory birds, and the management, transportation and disposal of wastes and other materials.

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.

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.

If one or more accidents were to occur in connection with the use of our systems or performance of our services, the affected customer may seek to terminate or 16 Table of Contents cancel its use of our services which could cause us to lose substantial revenues.

If one or more accidents were to occur in connection with the use of our systems or performance of our services, the affected customer may seek to terminate or cancel its use of our services which could cause us to lose substantial revenues.

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' spending for our systems and services.

To the extent that societal pressures or political or other factors are involved, it is possible that such liability 19 Table of Contents could be imposed without regard to our causation of or contribution to the asserted damage, or to other mitigating factors.

To the extent that societal pressures or political or other factors are involved, it is possible that such liability could be imposed without regard to our causation of or contribution to the asserted damage, or to other mitigating factors.

"Management's Discussion and Analysis of Financial Condition and Results of Operation—Debt Agreements." Our ability to comply with these financial condition tests can be affected by events beyond our control.

“Management’s Discussion and Analysis of Financial Condition and Results of Operation—Debt Agreements.” Our ability to comply with these financial condition tests can be affected by events beyond our control.

To the extent we are not able to offset our future income with our NOLs, this could adversely affect our operating results and cash flows if we attain profitability.

To the extent we are not able to offset our future income with our NOLs, this could adversely affect our operating results and cash flows.

As disclosed in Part II, Item 9A “Controls and Procedures”, management identified a material weakness in internal control related to ineffective information technology general controls in the areas of user access, application change management, operating system and logical access controls, and segregation of duties for a third-party information technology system that supports the Company’s financial reporting process for its last mile logistics services, which includes the costs of providing that service and the associated pass through revenues.

As disclosed in Part II, Item 9A Management’s Annual Report on Internal Control over Financial Reporting, management previously identified a material weakness in internal control related to ineffective information technology general controls in the areas of user access, application change management, operating system and logical access controls, and segregation of duties for a third-party information technology system that supports the Company’s financial reporting process for its last mile logistics services, which includes the costs of providing that service and the associated pass through revenues.

Our technologies, systems and networks, and those of our customers, 15 Table of Contents vendors, suppliers and other business partners, may become the target of cyberattacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of proprietary and other information, or other disruption of business operations.

Our technologies, systems and networks, and those of our vendors, suppliers and other business partners, may become the target of cyberattacks or information security breaches in the future that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of proprietary and other information, or other disruption of business operations.

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.

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.

In addition, the market price of our Class A common stock may fluctuate significantly in response to a number of factors outside of our control, including public reaction to our releases and filings, actions by our competitors and actions by our stockholders.

These broad market fluctuations may adversely affect the trading price of our Class A common stock. In addition, the market price of our Class A common stock may fluctuate significantly in response to a number of factors outside of our control, including public reaction to our releases and filings, actions by our competitors and actions by our stockholders.

In addition, subject to certain limitations and exceptions, the Original Investors may redeem their Solaris LLC Units (together with a corresponding number of shares of Class B common stock) for shares of Class A common stock (on a one-for-one basis, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions) and then sell those shares of Class A common stock.

In addition, subject to certain limitations and exceptions, the holders of interest in Solaris LLC may redeem their non-controlling interest related to the portion of the units in Solaris LLC (“Solaris LLC Units”) (together with a corresponding number of shares of Class B common stock) for shares of Class A common stock (on a one-for-one basis, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions) and then sell those shares of Class A common stock.

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. 12 Table of Contents We face significant competition that 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 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.

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.

Solaris Inc.’s sole material asset is its equity interest in Solaris LLC and Solaris Inc. is accordingly dependent upon distributions from Solaris LLC to pay taxes, make payments under the Tax Receivable Agreement and cover its corporate and other overhead expenses. Solaris Inc. is a holding company and has no material assets other than its equity interest in Solaris LLC.

Risks Related to Our Class A Common Stock Solaris Inc. is a holding company. Solaris Inc.’s sole material asset is its equity interest in Solaris LLC and Solaris Inc. is accordingly dependent upon distributions from Solaris LLC to pay taxes, make payments under the Tax Receivable Agreement and cover its corporate and other overhead expenses.

Finally, payments under the Tax Receivable Agreement will be based on the tax reporting positions that we will determine. The TRA Holders will not reimburse us for any payments previously made under the Tax Receivable Agreement if any tax benefits that have given rise to payments under the Tax Receivable Agreement are subsequently disallowed.

The TRA Holders will not reimburse us for any payments previously made under the Tax Receivable Agreement if any tax benefits that have given rise to payments under the Tax Receivable Agreement are subsequently disallowed.

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. 20 Table of Contents Our stock price could be volatile, and you may not be able to resell shares of your Class A common stock at or above the price you paid.

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 $74.6 million (calculated using a discount rate equal to one year LIBOR plus 100 basis points, applied against an undiscounted liability of $94.8 million, based upon the last reported closing sale price of our Class A common stock on December 31, 2022).

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).

Solaris Inc. will be required to make payments under the Tax Receivable Agreement for certain tax benefits that it may claim, and the amounts of such payments could be significant. In connection with the closing of the IPO, Solaris Inc. entered into the Tax Receivable Agreement with the TRA Holders (as defined herein).

Solaris Inc. will be required to make payments under the Tax Receivable Agreement for certain tax benefits that it may claim, and the amounts of such payments could be significant.

Some of our competitors may have greater financial, technical and personnel resources than we do, which may allow them to gain technological advantages or implement new technologies more rapidly than us. 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.

The SEC has additionally proposed a new rule that would require certain climate-related disclosures from registrants, which is expected to be finalized in 2023.

The SEC has additionally proposed a new rule that would require certain climate-related disclosures from registrants, which is expected to be finalized in 2024. Certain states have also enacted or are otherwise considering climate-related disclosure requirements.

As of December 31, 2022, the Company had approximately $234.0 million of federal NOL carryovers and $52.2 million of state NOL carryovers. $168.2 million of our federal NOL carryovers have no expiration date and the remaining federal and NOL carryovers expire in 2037. $28.1 million of our state NOL carryovers will expire in varying amounts beginning in 2037.

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.

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 14 Table of Contents evolving market. If we fail to manage acquisitions and integrations effectively, our results of operations could be adversely affected.

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 identified a material weakness in our internal control related to ineffective information technology general controls which, if not remediated appropriately or timely, could result in loss of investor confidence and adversely impact our stock price. Internal controls related to the operation of technology systems are critical to maintaining adequate internal control over financial reporting.

We previously identified a material weakness in our internal control related to ineffective information technology general controls which has been remediated as of December 31, 2023. Additional material weaknesses in internal control could arise in the future and, if not remediated appropriately or timely, could result in loss of investor confidence and adversely impact our stock price.

These risks include, but are not limited to: ● (i) the ongoing COVID-19 pandemic and the extent to which it has caused and may continue to cause business disruptions, disrupted the oil and gas industry and global supply chains, negatively impacted the global economy, reduced global demand for oil and gas and created significant volatility and disruption of financial and commodity markets; and ● (ii) the occurrence or threat of terrorist attacks in the United States or other countries, anti-terrorist efforts and other armed conflicts involving the United States or other countries, including continued hostilities around the globe, including in the Middle East and the conflict in Ukraine.

These risks include, but are not limited to: ● (i) epidemics or pandemics, including the effects of related public health concerns that may cause business disruptions, disrupt the oil and gas industry and global supply chains, negatively impact the global economy, reduce global demand for oil and gas and create significant volatility and disruption of financial and commodity markets; and ● (ii) the occurrence or threat of terrorist attacks in the United States or other countries, anti-terrorist efforts and other armed conflicts involving the United States or other countries, including continued hostilities around the globe, such as the war between Ukraine and Russia, the conflict between Israel and Hamas, and the regional conflict in the Middle East..

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.

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.

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 controlling stockholder. 21 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.

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.

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.

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.

Further, Solaris Inc.’s payment obligations under the Tax Receivable Agreement will not be conditioned upon the TRA Holders having a continued interest in Solaris Inc. or Solaris LLC. Accordingly, the TRA Holders' interests may conflict with those of the holders of our Class A common stock.

Additionally, holders of our Class A common stock could receive substantially less consideration in connection with a change of control transaction than they would receive in the absence of such obligation. Further, Solaris Inc.’s payment obligations under the Tax Receivable Agreement will not be conditioned upon the TRA Holders having a continued interest in Solaris Inc. or Solaris LLC.

Inflationary pressures have resulted in and may result in additional increases to the costs of our goods, services and personnel, which would in turn cause our capital expenditures and operating costs to rise. Sustained levels of high inflation have likewise caused the U.S. Federal Reserve and other central banks to increase interest rates multiple times in 2022 and the U.S.

“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.

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.

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. Risks Related to Our Class A Common Stock Solaris Inc. is a holding company.

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.

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.

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.

We depend on digital and information technologies and infrastructure to support our business, deliver our systems and perform many of our services and to process and record financial and operating data. Additionally, in the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and personally identifiable information of our employees.

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.

The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our Class A common stock.

Our stock price could be volatile, and you may not be able to resell shares of your Class A common stock at or above the price you paid. The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.

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 of one year London Interbank Offered Rate (“LIBOR”) plus 100 basis points).

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).

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. 22 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.

If our board of directors elects to issue preferred stock, it could be more difficult for a third party to acquire us.

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, and may have an adverse effect on our business and future profitability. Item 1B. Unresolved Staff Comments None. Item 2. Properties Our principal properties are described in Item 1.

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.

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. We may grow through acquisitions and our failure to properly plan and manage those acquisitions may adversely affect our performance.

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.

Federal Reserve has indicated its intention to continue to raise benchmark interest rates into 2023 in an effort to curb inflationary pressure on the costs of goods and services across the U.S., which could have the effects of raising the cost of capital and depressing economic growth, either of which – or the combination thereof – could hurt the financial and operating results of our business.

To the extent rates remain high, this could have the effects of raising the cost of capital and depressing economic growth, either of which – or the combination thereof – could hurt the financial and operating results of our business.

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 13. “Related Party Transactions” under Part II, Item 8.

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.

As a result, management concluded that our internal control over financial reporting was not effective as of December 31, 2022. We have begun implementing remedial measures and, while there can be no assurance that our efforts will be successful, we plan to remediate the material weakness prior to the end of fiscal 2023.

As a result, management concluded that our internal control over financial reporting was not effective as of December 31, 2022.

As cyber incidents continue to evolve, we will likely 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 systems may also be susceptible to outages due to fire, floods, power loss, usage errors by employees, computer viruses or other breaches.

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.

We are subject to cyber security risks and potential interruptions or failures in our information technology systems, the occurrence of which could result in information theft, data corruption, operational disruption and/or financial loss.

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.

Solaris Inc. has no independent means of generating revenue.

Solaris Inc. is a holding company and has no material assets other than its equity interest in Solaris LLC. Solaris Inc. has no independent means of generating revenue.

For additional information, see “Payables Related to the Tax Receivable Agreement” in Note 10. “Income Taxes” and Note. 13 “Related Party Transactions” under Part II, Item 8.

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.

Removed

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. 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.

Added

Additionally, the market in which we operate is experiencing increased vertical and horizontal integration both amongst peers as well as customers and suppliers. Consolidation amongst current or potential customers could affect demand for our products and services if those customers utilize competing solutions and services or gain their own capabilities through the consolidation itself.

Removed

This could result in significant losses, loss of customers and business opportunities, reputation damage, litigation, regulatory fines, penalties or intervention, reimbursement or other compensatory costs, or otherwise adversely affect our business, financial condition or results of operations. Our systems and controls for protecting against cyber security risks, and those used by our business partners, may not be sufficient.

Added

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.

Removed

Any material disruption in our information technology systems or systems that affect our business operations, delays or difficulties in implementing or integrating new systems or enhancing current systems, or any vulnerabilities rending data or systems unusable following any mandated remote work situations, could have an adverse effect on our business and results of operations.

Added

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.

Removed

We are subject to environmental and occupational health and safety laws and regulations that may expose us to significant costs and liabilities.

Added

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.

Removed

Increasing attention to environmental, social and governance (“ESG”) matters may impact our business.

Added

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.

Removed

Our principal stockholders collectively hold a significant amount of the voting power of our common stock.

Added

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.

Removed

“Financial Statements and Supplementary Data” for additional information. 24 Table of Contents Additionally, holders of our Class A common stock could receive substantially less consideration in connection with a change of control transaction than they would receive in the absence of such obligation.

Added

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.

Removed

These measures will result in additional technology and other expenses.

Added

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.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed0 unchanged

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2023 filing

Biggest changeItem 4. Mine Safety Disclosures 26 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 27 Item 6. Reserved 29 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 37 Item 8.

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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+1 added−2 removed1 unchanged

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2023 filing

Biggest change“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” contained herein. 28 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, 2022 and the average price paid per share: Total Number of Average Price Shares Paid Per Period Purchased Share January 1 - January 31 — $ — February 1 - February 28 — — March 1 - March 31 95,514 (1) 12.97 April 1 - April 30 505 (1) 11.41 May 1 - May 31 256 11.25 June 1 - June 30 914 (1) 13.25 July 1 - July 31 215 10.05 August 1 - August 31 8,689 (1) 10.38 September 1 - September 30 — — October 1 - October 31 — — November 1 - November 30 — — December 1 - December 31 145 (1) 9.27 Total 106,238 $ 12.74 (1) Represents shares of stock withheld for the payment of withholding taxes upon the vesting of restricted stock. Sales of Unregistered Equity Securities None.

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.

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 March 3, 2023, we had approximately 3 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 “SOI.” As of February 21, 2024, we had approximately 4 holders of record of our Class A common stock.

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.

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.

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 March 3, 2023, we had 13 holders of record of 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.

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. 27 Table of Contents Source: Bloomberg. Assumes dividend reinvestment on pay date.

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.

Dividend Policy During the year ended December 31, 2022, the Company paid quarterly cash dividends of $0.105 per share of Class A common stock. We currently intend to continue paying the quarterly dividend while retaining the balance of future earnings, if any, to finance the growth of our business.

We currently intend to continue paying a quarterly dividend, which is currently $0.12 per share quarterly or $0.48 per share annually, while retaining the balance of future earnings, if any, to finance the growth of our business.

Stock Performance Graph The graph below compares the cumulative total shareholder return on our common stock with the cumulative total return on the Standard & Poor’s 500 Stock Index and the Oilfield Service Index since May 11, 2017.

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.

Removed

In addition, our Credit Agreement contains certain restrictions on our ability to pay cash dividends to holders of our Class A common stock.

Added

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.

Removed

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.

Item 7. Management's Discussion & Analysis

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

43 edited+19 added−20 removed18 unchanged

2022 filing

2023 filing

Biggest changeWe expect both consolidation and financial discipline will likely continue to be important themes for the energy industry going forward. 30 Table of Contents Results of Operations Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Year Ended December 31, 2022 2021 Change (in thousands) Revenue $ 320,005 $ 159,189 $ 160,816 Operating costs and expenses: Cost of services (exclusive of depreciation) 219,775 115,459 104,316 Depreciation and amortization 30,433 27,210 3,223 Property tax contingency 3,072 — 3,072 Selling, general and administrative 23,074 19,264 3,810 Other operating expense (income) 1,847 (2,357) 4,204 Total operating costs and expenses 278,201 159,576 118,625 Operating income (loss) 41,804 (387) 42,191 Interest expense, net (489) (247) (242) Total other expense (489) (247) (242) Income (loss) before income tax expense 41,315 (634) 41,949 Provision for income taxes (7,803) (626) (7,177) Net income (loss) 33,512 (1,260) 34,772 Less: net (income) loss related to non-controlling interests (12,354) 392 (12,746) Net income (loss) attributable to Solaris $ 21,158 $ (868) $ 22,026 Revenue Revenue increased $160.8 million, or 101%, to $320.0 million for the year ended December 31, 2022 compared to $159.2 million for the year ended December 31, 2021.

Biggest changeWe 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.

Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K 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, 2021 .

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 .

The increases in EBITDA and Adjusted EBITDA were primarily due to the changes in revenues and expenses, discussed above. 33 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.

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.

Our primary uses of capital have been to fund ongoing operations, capital expenditures to support organic growth, including our fleet development and related maintenance and fleet upgrades, repurchase shares of Class A common stock in the open market, and pay dividends.

Our primary uses of capital have been to fund ongoing operations, capital expenditures to support organic growth, including our system development and related maintenance and system upgrades, repurchase shares of Class A common stock in the open market, and pay dividends.

If market conditions deteriorate, including crude oil prices significantly declining and remaining at low levels for a sustained period of time, we could be required to record impairments of the carrying value of our long-lived assets, definite-lived intangible assets or goodwill in the future which could have a material adverse impact on our operating results.

If market conditions deteriorate, including crude oil prices significantly declining and remaining at low levels for a sustained period of time, we could be required to record impairments of the carrying value of our long-lived assets, 40 Table of Contents definite-lived intangible assets or goodwill in the future which could have a material adverse impact on our operating results.

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 Report, all of which are difficult to predict.

We have no material off balance sheet arrangements as of December 31, 2022, except for purchase commitments under supply agreements disclosed below. 34 Table of Contents In 2023, we expect to pay approximately $0.2 million in commitment fees on our Credit Agreement, calculated based on the unused portion of lender commitments, at the applicable commitment fee rate of 0.375%.

We have no material off balance sheet arrangements as of December 31, 2023, except for purchase commitments under supply agreements disclosed below. 39 Table of Contents In 2024, we expect to pay approximately $0.2 million in commitment fees on our Credit Agreement, calculated based on the unused portion of lender commitments as of December 31, 2023, at the applicable commitment fee rate of 0.375%.

Other operating expense in the twelve months 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 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.

Income Taxes Solaris Inc. is a corporation and, as a result, is subject to United States federal, state and local income taxes. For the year ended December 31, 2022 we recognized a combined United States federal and state expense for income taxes of $7.8 million.

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.

“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 36 Table of Contents Inc.’s acquisition (or deemed acquisition for United States federal income tax purposes) of Solaris LLC Units in connection with the IPO or pursuant to an exercise of the Redemption Right or the Call Right (each as defined in the Solaris LLC Agreement) 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 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.

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, 2022 and 2021, we had $55.4 million and $62.9 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, 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.

Although no assurance can be given, depending upon market conditions and other factors, we may also have the ability to issue additional equity and debt if needed. As of December 31, 2022, cash and cash equivalents totaled $8.8 million. We have $8.0 million in borrowings outstanding under our Credit Agreement and have $42.0 million of available borrowing capacity.

Although no assurance can be given, depending upon market conditions and other factors, we may also have the ability to issue additional equity and debt if needed. As of December 31, 2023, cash and cash equivalents totaled $5.8 million. We have $30.0 million in borrowings outstanding under our Credit Agreement and have $41.3 million of available borrowing capacity.

As of December 31, 2022, we had purchase obligations of approximately $29.7 million payable within the next twelve months. See Note 12. “Commitments and Contingencies” under Item 8. “Financial Statements and Supplementary Data” for information regarding scheduled contractual obligations. Critical Accounting Policies and Estimates The preparation of financial statements requires the use of judgments and estimates.

As of December 31, 2023, we had purchase obligations of approximately $3.5 million payable within the next twelve months. See Note 12. “Commitments and Contingencies” under Item 8. “Financial Statements and Supplementary Data” for information regarding scheduled contractual obligations. Critical Accounting Estimates The preparation of financial statements requires the use of judgments and estimates.

The effective combined United States federal and state income tax rates were 18.9% and (98.7)% for the year ended December 31, 2022 and 2021, 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 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.

We define Adjusted EBITDA as EBITDA plus (i) stock-based compensation expense and (ii) certain non-cash items and any extraordinary, unusual or non-recurring gains, losses or expenses. 32 Table of Contents EBITDA and Adjusted EBITDA should not be considered in isolation or as substitutes for an analysis of our results of operation and financial condition as reported in accordance with accounting standards generally accepted in the United States (“GAAP”).

We define Adjusted EBITDA as EBITDA plus (i) stock-based 37 Table of Contents compensation expense and (ii) certain non-cash items and any extraordinary, unusual or non-recurring gains, losses or expenses. EBITDA and Adjusted EBITDA should not be considered in isolation or as substitutes for an analysis of our results of operation and financial condition as reported in accordance with GAAP.

As of December 31, 2022, if our borrowings under the Credit Agreement remain at $8.0 million, we expect to pay approximately $0.6 million in interest within the next twelve months, calculated based on the weighted average interest rate on the borrowings outstanding as of December 31, 2022 of approximately 7.16%.

As of December 31, 2023, if our borrowings under the Credit Agreement remain at $30.0 million, we expect to pay approximately $2.5 million in interest within the next twelve months, calculated based on the weighted average interest rate on the borrowings outstanding as of December 31, 2023 of approximately 8.38%.

Net cash provided by operating activities was $68.0 million for the year ended December 31, 2022, compared to net cash provided by operating activities of $16.5 million for the year ended December 31, 2021. The increase of $51.5 million in operating cash flow was primarily attributable to increased profitability from operations. Investing 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 .

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 (i) Solaris Oilfield Infrastructure, LLC ("Solaris LLC") and its consolidated subsidiaries prior to the completion of our initial public offering and (ii) Solaris Oilfield Infrastructure, Inc.

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.

Net cash used in financing activities of $16.1 million for the year ended December 31, 2022, was primarily related to quarterly dividends of $19.6 million, payments under finance leases of $1.6 million, payments under insurance premium financing of $1.5 million and $1.1 million of payments related to vesting of stock-based compensation, partially offset by net borrowings under the credit agreement of $8.0 million.

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.

“Summary of Significant Accounting Policies — Recently Issued Accounting Standards” under Item 8. “Financial Statements and Supplementary Data” for a discussion of recent accounting pronouncements.

“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

We assume no obligation to update any of these forward-looking statements except as otherwise required by law. 29 Table of Contents Overview We design and manufacture specialized equipment, which combined with field technician support, 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.

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.

Adjusted EBITDA increased $53.7 million to $83.8 million for the year ended December 31, 2022 compared to $30.1 million for the year ended December 31, 2021.

Adjusted EBITDA increased $12.9 million to $96.7 million for the year ended December 31, 2023 compared to $83.8 million for the year ended December 31, 2022.

("Solaris Inc.") and its consolidated subsidiaries following the completion of our initial public offering. 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 Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.

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.

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.

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.

Provision for Income Taxes During the year ended December 31, 2022, we recognized a combined United States federal and state expense for income taxes of $7.8 million, an increase of $7.2 million as compared to the $0.6 million income tax expense we recognized during the year ended December 31, 2021. This change was attributable to operating gains.

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.

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021: EBITDA and Adjusted EBITDA EBITDA increased $45.4 million to $72.2 million for the year ended December 31, 2022 compared to $26.8 million for the year ended December 31, 2021.

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.

We conduct impairment tests on goodwill annually, on October 31, or more frequently whenever events or changes in circumstances indicate an impairment may exist. 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.

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.

Cash Flows The following table summarizes our cash flows for the periods indicated: Year Ended December 31, Change 2022 2021 2022 vs. 2021 (in thousands) Net cash provided by operating activities $ 67,996 $ 16,473 $ 51,523 Net cash used in investing activities (79,539) (19,524) (60,015) Net cash used in financing activities (16,119) (20,818) 4,699 Net change in cash $ (27,662) $ (23,869) $ (3,793) Analysis of Cash Flow Changes for Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Operating Activities.

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.

The sustainability of favorable supply-demand dynamics and a strong commodity environment will depend on multiple factors, including the health of the global economy, any further supply chain disruptions or potential regulatory changes.

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.

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. 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.

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.

Net cash used in investing activities was $79.5 million for the year ended December 31, 2022, compared to $19.5 million for the year ended December 31, 2021. The increase in investing activities of $60.0 million is primarily due to capital expenditures related to new technologies and enhancements to our fleet. Financing Activities.

Net cash used in investing activities was $62.0 million for the year ended December 31, 2023, compared to $79.5 million for the year ended December 31, 2022. The decrease in investing activities of $17.5 million is primarily due to a reduction in capital expenditures as the build out of our new service lines was largely completed during 2023. Financing Activities.

(2) Property tax contingency represents a reserve related to an unfavorable Texas District Court ruling related to prior period property taxes. The ruling is currently under appeal. (3) Represents stock-based compensation expense related to restricted stock. (4) Employee retention credit as part of the Consolidated Appropriations Act of 2021, net of administrative fees.

(2) Property tax contingency represents a reserve related to an unfavorable Texas District Court ruling related to prior period property taxes. The ruling is currently under appeal and we anticipate a ruling to be delivered sometime in the first half of 2024. (3) Represents stock-based compensation expense related to restricted stock and performance-based restricted stock units.

Impairment is the condition that exists when the carrying amount of a long-lived asset exceeds its fair value, and any impairment charge that we record reduces our operating income. Goodwill is the excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired and liabilities assumed.

Value of Long-Lived Assets, Definite-Lived Intangible Assets and Goodwill We carry a variety of long-lived assets on our balance sheet including property, plant and equipment, goodwill and other intangibles. Impairment is the condition that exists when the carrying amount of a long-lived asset exceeds its fair value, and any impairment charge that we record reduces our operating income.

In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur.

In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. We assume no obligation to update any of these forward-looking statements except as otherwise required by law.

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. 31 Table of Contents Selling, General and Administrative Expenses Selling, general and administrative expenses, excluding depreciation and amortization, increased $3.8 million, or 20%, to $23.1 million for the year ended December 31, 2022 compared to $19.3 million for the year ended December 31, 2021.

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.

The following table presents a reconciliation of Net income to EBITDA and Adjusted EBITDA for each of the periods indicated. Year ended December 31, 2022 2021 Change (in thousands) Net income (loss) $ 33,512 $ (1,260) $ 34,772 Depreciation and amortization 30,433 27,210 3,223 Interest expense, net 489 247 242 Income taxes (1) 7,803 626 7,177 EBITDA $ 72,237 $ 26,823 $ 45,414 Property tax contingency (2) 3,072 — 3,072 Stock-based compensation expense (3) 6,092 5,210 882 Employee retention credit (4) — (2,957) 2,957 Change in payables related to Tax Receivable Agreement (5) (663) — (663) Credit losses (420) 365 (785) Other (6) 3,464 625 2,839 Adjusted EBITDA $ 83,782 $ 30,066 $ 53,716 (1) Federal and state income taxes.

The following table presents a reconciliation of Net income to EBITDA and Adjusted EBITDA for each of the periods indicated. Year Ended December 31, 2023 2022 Change (in thousands) Net income $ 38,775 $ 33,512 $ 5,263 Depreciation and amortization 36,185 30,433 5,752 Interest expense, net 3,307 489 2,818 Income taxes (1) 7,820 7,803 17 EBITDA $ 86,087 $ 72,237 $ 13,850 Property tax contingency (2) — 3,072 (3,072) Stock-based compensation expense (3) 7,732 6,092 1,640 Loss on disposal of assets 386 3,754 (3,368) Impairment on fixed assets (4) 1,423 — 1,423 Change in payables related to Tax Receivable Agreement (5) — (663) 663 Credit losses 810 (420) 1,230 Other (6) 255 (290) 545 Adjusted EBITDA $ 96,693 $ 83,782 $ 12,911 (1) Federal and state income taxes.

Comparison of Non-GAAP Financial Measures We view EBITDA and Adjusted EBITDA as important indicators of performance. We define EBITDA as net income, plus (i) depreciation and amortization expense, (ii) interest expense and (iii) income tax expense, including franchise taxes.

Comparison of Non-GAAP Financial Measures We view EBITDA and Adjusted EBITDA as important indicators of performance.

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. 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.

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.

(5) Reduction in liability due to state tax rate change. (6) Other includes loss on disposal of assets, gain on insurance claims and other settlements, and costs related to the evaluation of potential acquisitions.

(4) Impairment recorded on certain fixed assets classified as assets held for sale during the year ended December 31, 2023. (5) Reduction in liability due to state tax rate change. (6) Other includes gain on insurance claims and other settlements.

The increase is primarily due to increases in headcount and professional fees. Other Operating Expense (Income) Other operating expense (income) decreased $4.2 million, or 178% to expense of $1.8 million for the year ended December 31, 2022 compared to income of $2.4 million for the year ended December 31, 2021.

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.

Cost of Services Cost of services, excluding depreciation and amortization expense, increased $104.3 million, or 90%, to $219.8 million for the year ended December 31, 2022 compared to $115.5 million for the year ended December 31, 2021. The increase was primarily due to an increase in operating costs to support an activity-driven increase in demand for our products and services.

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.

Net cash used in financing activities of $20.8 million for the year ended December 31, 2021 was primarily related to quarterly dividends of $19.2 million and $0.8 million of payments related to vesting of stock-based compensation.

Net cash used in financing activities for the year ended December 31, 2023 was $30.9 milion. The Company repurchased shares of $26.4 million and distributed a total of $20.7 million to shareholders in the form of dividends. Net borrowings under the Credit Agreement for the year ended December 31, 2023 were $22.0 million.

Mobile proppant systems on a fully utilized basis increased from 57 systems for the year ended December 31, 2021 to 86 systems for the year ended December 31, 2022, in response to the increase in industry activity levels and due to activity growth with new and existing customers led by the introduction of new products.

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.

Removed

Our equipment and services are deployed across active oil and natural gas basins in the United States. Recent Trends and Outlook Supply and demand dynamics in the oil and natural gas industry remained tight throughout 2022.

Added

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.

Removed

Continued supply chain tightness, gradual reopening of certain global economies and geopolitical conflicts, among other factors, drove WTI oil prices to fluctuate between $70 per barrel and over $120 per barrel throughout 2022. Henry Hub natural gas prices also fluctuated between $3.70 per MMBtu and nearly $10.00 per MMBtu throughout 2022.

Added

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.

Removed

While an improvement in commodity prices has historically driven an increase in drilling and completion activity in North America, overall activity levels have been impacted by industry capital discipline and supply chain challenges. Late in December 2022, Henry Hub natural gas prices began to decline to approximately $2.40 per MMBtu at the beginning of February 2023.

Added

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.

Removed

While the extent and duration of these lower natural gas commodity prices is unknown, a decline in our customers’ activity in natural gas basins may impact our overall activity levels. North American land activity improved throughout 2022 as the Baker Hughes Land rig count increased 52% on average compared to a 52% increase in our fully utilized systems during 2022.

Added

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.

Removed

Overall, demand for our offerings is predominantly influenced by the level of oil and natural gas well drilling and completion activity. While our fully utilized systems are highly correlated with US land rig count activity over longer periods, timing differences between drilling and completion activity can result in lags of one to two quarters or longer.

Added

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.

Removed

In 2022, our system count growth outpaced general activity due to new technology introductions. In 2023, we expect slower general market growth in North American land activity due to continued capital discipline among oil and gas operators and supply chain and labor constraints limiting the addition of additional drilling rig and completion crews.

Added

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.

Removed

We expect our activity, as measured by fully utilized systems, will continue to outpace the market in 2023 as we enhance our offering and gain additional market share through additional deployments of our new technology.

Added

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.

Removed

Continued industry consolidation amongst some of our E&P and oil service customers combined with financial discipline from publicly traded energy companies has reduced industry-wide capital spending, resulting in activity levels that remain below pre-pandemic levels despite the recovery in commodity prices.

Added

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.

Removed

Revenue increased mainly due to an activity-driven increase in demand for our products and services, as well as new technology introductions and increased pricing.

Added

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.

Removed

Cost of services as a percentage of revenue was 69% and 73% for the year ended December 31, 2022 and 2021, respectively. Property Tax Contingency We are subject to a number of state and local taxes that are not income-based.

Added

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.

Removed

While we are vigorously appealing this ruling, we have recognized $3.1 million in accrued liabilities and cost of services as of and for the the year ended December 31, 2022.

Added

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.

Removed

Other operating income in the twelve months ended December 31, 2021 primarily relate to employee retention credits, credit losses, gain on insurance claims, transaction costs, and loss on disposal of assets.

Added

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.

Removed

Revenue Recognition Our revenue is primarily derived from short-term contracts and consists of fees charged to customers for the use of our equipment and labor services, mobilization and transportation of our equipment, services coordinating the transportation of proppant delivery to our equipment, transloading services and for inventory software services, each of which are considered to be separate performance obligations.

Added

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.

Removed

The majority of our contracts contain multiple performance obligations, such as work orders containing a combination of equipment, transportation, and labor services.

Added

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.

Removed

We allocate the transaction price to each performance obligation identified in the contract based on relative stand-alone selling prices, or estimates of such prices, and recognize the related revenue as control of each individual product or service is transferred to the customer, in satisfaction of the corresponding performance obligations.

Added

Other 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.

Removed

We measure progress using an input method based on resources consumed or expended relative to the total resources expected to be consumed or expended. We assess our customers’ ability and intention to pay, which is based on a variety of factors including historical payment experience and financial condition and we typically charge our customers on a weekly or monthly basis.

Added

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.

Removed

Variable consideration typically may relate to discounts, price concessions and incentives. The Company estimates variable consideration based on the amount of consideration we expect to receive.

Added

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.

Removed

The Company accrues revenue on an ongoing basis to reflect updated information for variable consideration as performance obligations are met. 35 Table of Contents Value of Long-Lived Assets, Definite-Lived Intangible Assets and Goodwill We carry a variety of long-lived assets on our balance sheet including property, plant and equipment, goodwill and other intangibles.

Added

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.

Removed

Key estimates relate to the fair value and recoverability of carrying values of long-lived assets, definite-lived intangible assets and goodwill.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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2022 filing

2023 filing

Biggest changeCredit Risk The majority of our accounts receivable have payment terms of 60 days or less. As of December 31, 2022, one customer accounted for 22% of our total accounts receivable.

Biggest changeCredit 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.

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. 37 Table of Contents

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 less than $0.1 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.

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.

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, 2022, we had $8.0 million of debt outstanding, with a weighted average interest rate of 7.16%.

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%.

Top changes in Solaris Energy Infrastructure, Inc.'s 2023 10-K

Item 1. Business

Item 1A. Risk Factors

Item 4. Mine Safety Disclosures

Item 5. Market for Registrant's Common Equity

Item 7. Management's Discussion & Analysis

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Other SEI 10-K year-over-year comparisons