Solaris Oilfield Infrastructure Inc Reports Mixed 2023 Results and Optimistic Outlook for 2024
Net Income: $39 million for full year 2023, a 15% increase from 2022.
Revenue: $293 million for full year 2023, down 8% from 2022.
Adjusted EBITDA: $97 million for full year 2023, up 15% from 2022.
Dividends: Raised twice in 2023, with a 9% increase in Q4 2023 compared to Q3 2023.
Share Repurchases: 4.3 million shares repurchased since Q1 2023, with $15 million remaining in the authorization.
Free Cash Flow: Positive $16 million in Q4 2023, with expectations of higher free cash flow in 2024.
Capital Expenditures: $64 million in 2023, expected to reduce by approximately 75% in 2024.
On February 26, 2024, Solaris Oilfield Infrastructure Inc (NYSE:SOI) released its 8-K filing, announcing its financial results for the fourth quarter and full year of 2023. The company, a provider of oilfield products and services, reported a mixed performance with a decrease in revenue but an increase in net income and Adjusted EBITDA for the year. The company's strategic investments in new equipment and systems deployment at well sites have positioned it for a stronger cash flow generation in 2024.
Solaris Oilfield Infrastructure Inc specializes in mobile proppant management systems that enhance the efficiency and safety of oil and natural gas well site operations. The company's patented systems are designed to reduce costs and time required to complete wells by improving proppant logistics. Solaris serves exploration and production companies as well as oilfield service providers, generating revenue primarily through system rentals and associated services.
Financial Performance and Shareholder Returns
Despite a year-over-year decrease in revenue, SOI's focus on operational efficiency and cost management led to a 15% increase in Adjusted EBITDA, reaching $97 million for the full year. The company's net income also rose to $39 million, or $0.78 per diluted Class A share, compared to $34 million, or $0.64 per diluted Class A share in 2022. These financial achievements underscore the company's ability to navigate market challenges and maintain profitability in the competitive oil and gas industry.
SOI's commitment to shareholder returns was evident in 2023, with the company raising its dividend per share twice and returning $47 million to shareholders through dividends and share repurchases. The Board of Directors approved a cash dividend of $0.12 per share of Class A common stock for the first quarter of 2024, maintaining the same level as the previous quarter. The company also repurchased 85,278 shares in the fourth quarter of 2023 for $0.7 million and an additional 1.1 million shares from January 19, 2024, to February 9, 2024, for approximately $8.1 million.
Capital Expenditures and Liquidity
SOI's capital expenditures for the full year 2023 were $64 million, with a significant reduction expected in 2024 to less than $15 million. This reduction reflects the completion of strategic investments in new equipment and is anticipated to contribute to higher free cash flow. As of December 31, 2023, the company had $6 million in cash and reduced net borrowings on its credit facility by $7 million, ending the year with $30 million in borrowings outstanding and $47 million of liquidity.
Challenges and Outlook
The company faced challenges in 2023, including a 9% decrease in revenue in the fourth quarter compared to the previous quarter and a 25% decrease compared to the fourth quarter of 2022. This decline was attributed to lower ancillary last mile logistics services activity and a decrease in frac crews followed. However, SOI's proactive measures to optimize its operations and the expected increase in free cash flow in 2024 position the company for continued shareholder returns and a robust balance sheet.
In summary, Solaris Oilfield Infrastructure Inc's 2023 performance reflects its resilience in a fluctuating market and its strategic focus on long-term growth. With a strong emphasis on shareholder value, disciplined capital expenditure, and an optimistic outlook for 2024, SOI is poised to continue its trajectory of financial stability and operational excellence.
For a detailed discussion of SOI's fourth quarter and full year 2023 results, investors and interested parties are encouraged to join the conference call scheduled for February 27, 2024.
Conference Call and Investor Relations
Solaris will host a conference call to discuss its results for the fourth quarter and full year 2023 on February 27, 2024. Participants can join the call using the provided dial-in numbers or via live webcast on the company's website. An audio replay of the conference call will be available shortly after the conclusion of the call for approximately seven days.
For further information, please contact Yvonne Fletcher, Senior Vice President of Finance and Investor Relations, at IR@solarisoilfield.com.
Explore the complete 8-K earnings release (here) from Solaris Oilfield Infrastructure Inc for further details.
This article first appeared on GuruFocus.
