Solaris Oilfield Infrastructure, Inc. Announces Fourth Quarter and Full-Year 2017 Results

March 6, 2018

Fourth Quarter 2017 Highlights

Record net income of $9.2 million, which included $701,000 of net
expense relating to the enactment of the Tax Cuts and Jobs Act of 2017
Record adjusted EBITDA of $15.2 million; 36% increase versus third
quarter 2017 and up 269% year-over-year
Record revenue of $25.2 million; 36% increase versus third quarter
2017 and up 246% year-over-year
Record 6,146 revenue days; 35% increase versus third quarter 2017 and
up 188% year-over-year
Added 18 proppant management systems to the rental fleet; total of 77
systems at year-end

HOUSTON–(BUSINESS WIRE)–Solaris Oilfield Infrastructure, Inc. (NYSE:SOI) (“Solaris” or the
“Company”), a leading independent provider of supply chain management
and logistics solutions designed to drive efficiencies and reduce costs
for the oil and natural gas industry, today reported financial results
for the fourth quarter and fiscal year 2017, as further described in the
Company’s Annual Report on Form 10-K for the year ended December 31,
2017, filed with the Securities and Exchange Commission (the “SEC”)
today.

Fourth Quarter 2017 Financial Review

Solaris reported net income of $9.2 million, or $0.13 per share, for
fourth quarter 2017, compared to net income of $3.0 million in fourth
quarter 2016 and net income of $7.4 million, or $0.13 per share, in
third quarter 2017. Fourth quarter 2017 net income included certain
non-recurring items, including approximately $701,000 of net expenses
resulting from the Tax Cuts and Jobs Act of 2017 (the “Tax Act”),
$581,000 of IPO-related compensation expense, $47,000 related to a loss
on disposal of assets and $107,000 of non-recurring transaction costs.

Adjusted EBITDA for the fourth quarter was $15.2 million, an increase of
$11.1 million from fourth quarter 2016 and an increase of $4.0 million
compared to third quarter 2017. A description of adjusted EBITDA and a
reconciliation to net income, its most directly comparable GAAP measure,
is provided below.

Adjusted pro forma net income for the fourth quarter was $8.9 million,
or $0.20 per fully exchanged and diluted share, an increase of $7.0
million and $0.15 per diluted share from fourth quarter 2016 and an
increase of $3.4 million and $0.07 per diluted share compared to third
quarter 2017. A description of adjusted pro forma net income and a
reconciliation to net income attributable to Solaris, its most directly
comparable GAAP measure, and the computation of adjusted pro forma
earnings per fully exchanged and diluted share are provided below.

Revenues were $25.2 million for the quarter, an increase of $17.9
million, or 246%, compared to fourth quarter 2016, and an increase of
$6.7 million, or 36%, compared to third quarter 2017.

During fourth quarter 2017, the Company generated 6,146 revenue days,
the combined number of days that its systems earned revenue during the
quarter, a 188% increase from fourth quarter 2016, and up 35% compared
to third quarter 2017. Customer demand and adoption rates for Solaris’
systems continue to grow as proppant consumption levels increase across
the industry and customers realize the benefits of Solaris’ technology.

In December 2017, the Tax Act was enacted into law. The Tax Act provides
for significant changes to the U.S. Internal Revenue Code of 1986, as
amended, including a reduction of the U.S. federal corporate income tax
rate from 35% to 21%, among other provisions. As a result of the Tax
Act, the Company recognized a $21.9 million benefit in other income
related to the reduction in liabilities under its tax receivable
agreement in the fourth quarter of 2017. The Company also recognized an
additional $22.6 million of income tax expense as a provisional amount,
relating to the remeasurement of its deferred tax assets.

Full-year 2017 Financial Review

Solaris reported net income of $22.5 million for the fiscal year ended
December 31, 2017, compared to net income of $2.8 million in fiscal
2016. 2017 net income included certain non-recurring items, including
approximately $701,000 of net expenses resulting from the Tax Act, $4.6
million of IPO-related compensation expense, $498,000 related to a loss
on disposal of assets, $348,000 of non-recurring organizational costs
and $143,000 of non-recurring transaction costs.

Adjusted EBITDA for fiscal 2017 was $39.9 million, an increase of $33.1
million from fiscal 2016. A description of adjusted EBITDA and a
reconciliation to net income, its most directly comparable GAAP measure,
is provided below.

Adjusted pro forma net income for fiscal 2017 was $21.1 million, or
$0.48 per fully exchanged and diluted share, an increase of $19.3
million and $0.44 per diluted share from fiscal 2016. A description of
adjusted pro forma net income and a reconciliation to net income
attributable to Solaris, its most directly comparable GAAP measure, and
the computation of adjusted pro forma earnings per fully exchanged and
diluted share are provided below.

Revenues were $67.4 million for fiscal 2017, an increase of $49.2
million, or 271%, compared to fiscal 2016.

During fiscal 2017, the Company generated 16,712 revenue days, a 191%
increase from fiscal 2016. Customer demand and adoption rates for
Solaris’ systems continue to grow as proppant consumption levels
increase across the industry and customers realize the benefits of
Solaris’ technology.

As a result of the Tax Act, the Company recognized a $21.9 million
benefit in other income related to the reduction in liabilities under
its tax receivable agreement in fiscal year 2017. The Company also
recognized an additional $22.6 million of income tax expense as a
provisional amount, relating to the remeasurement of its deferred tax
assets.

Capital Expenditures and Liquidity

Driven by strong customer demand and continued customer adoption of our
proppant management systems and services, the Company invested $49.9
million during the fourth quarter, which included adding eighteen
systems to the fleet, ending the year with 77 systems. Also, the
Company’s fourth quarter capital expenditures included $18.9 million in
construction activities related to the Kingfisher Facility and the
acquisition of the assets of Railtronix, LLC. These investments help
address rising customer demand and are expected to drive future earnings
and cash flow growth for Solaris.

During the fourth quarter, the Company completed a public offering of
8,050,000 Class A Shares, including 3,000,000 primary shares issued and
sold by the Company. Net of underwriting discounts and commissions and
offering expenses, the Company received net proceeds of approximately
$44.5 million. The Company contributed all of the net proceeds of the
offering to its subsidiary Solaris Oilfield Infrastructure, LLC
(“Solaris LLC”) in exchange for units in Solaris LLC (“Solaris LLC
Units”).

As previously disclosed, the Company also entered into a new credit
agreement with certain lenders in January 2018. The credit facility has
a term of four years and is composed of a $20 million revolver and a $50
million delayed draw term loan.

As of February 28, 2018, the Company had approximately $107.6 million of
liquidity, including $43.4 million in cash and approximately $64.2
million of availability under the undrawn credit facility.

Operational Update and Outlook

We currently have 91 systems in the rental fleet, all of which are
deployed to customers. The Permian Basin continues to be our most active
area, followed by the Eagle Ford Shale, SCOOP/STACK formations,
Marcellus/Utica Shale and the Haynesville Shale. Our systems are highly
mobile and can be deployed quickly in response to customer demand.

Proppant supply disruptions and continued logistic complexities drive
demand for our products and services. To meet growing demand, we
recently increased our manufacturing rate and expect to deliver a total
of eight systems to the rental fleet in March, which will represent the
highest monthly manufacturing rate the Company has achieved in its
history. We have been able to accelerate our manufacturing rate through
selective outsourcing of certain components of our systems. Based on our
current manufacturing outlook, we expect to end the first quarter with
96 to 98 systems in the fleet and expect to end the second quarter with
118 to 122 systems in the fleet.

Transloading and construction activity continues at the Kingfisher
Facility. Completion of the initial phase of construction remains on
track for August 2018. In the interim, we are providing direct
rail-to-truck transloading service for our anchor customer. Since
commencing transloading operations in mid-January 2018, we have begun
receiving regular shipments of railcars.

Solaris’ Chief Executive Officer Greg Lanham commented, “We are very
proud of all that we accomplished in 2017. We more than doubled our
mobile proppant management system fleet – from 30 systems to 77 systems
– and significantly expanded our market share. We completed our initial
public offering, commenced construction of the Kingfisher Facility and
completed the Railtronix acquisition. We believe our current fleet of 91
systems represents the industry’s leading market share for new
technology proppant handling solutions.”

“We look forward to reaching new milestones in 2018, including
delivering eight systems in a single month for the first time in March
and adding our 100th system to the fleet in April. Our strong
balance sheet, experienced team and unique value proposition provide the
opportunity to continue to build upon our success and drive additional
efficiencies for our customers.”

Conference Call

The Company will host a conference call to discuss its fourth quarter
and fiscal 2017 results on Wednesday, March 7, 2018 at 7:30 a.m. Central
Time (8:30 a.m. Eastern Time). To join the conference call from within
the United States, participants may dial (844) 413-3978. To join the
conference call from outside of the United States, participants may dial
(412) 317-6594. When instructed, please ask the operator to be joined to
the Solaris Oilfield Infrastructure, Inc. call. Participants are
encouraged to log in to the webcast or dial in to the conference call
approximately ten minutes prior to the start time. To listen via live
webcast, please visit the Investor Relations section of the Company’s
website, http://www.solarisoilfield.com.

An audio replay of the conference call will be available shortly after
the conclusion of the call and will remain available for approximately
seven days. It can be accessed by dialing (877) 344-7529 within the
United States or (412) 317-0088 outside of the United States. The
conference call replay access code is 10116267. The replay will also be
available in the Investor Relations section of the Company’s website
shortly after the conclusion of the call and will remain available for
approximately seven days.

About Solaris Oilfield Infrastructure, Inc.

Solaris Oilfield Infrastructure, Inc. (NYSE:SOI) manufactures and
provides patented mobile proppant management systems that unload, store
and deliver proppant at oil and natural gas well sites. These patented
systems are deployed in many of the most active oil and natural gas
basins in the United States, including the Permian Basin, the Eagle Ford
Shale, the STACK/SCOOP formation and the Haynesville Shale. Solaris’
high-capacity transload facility in Kingfisher, Oklahoma serves
customers with operations in the STACK/SCOOP formation. Additional
information is available on the Solaris’ website, www.solarisoilfield.com.

Website Disclosure

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

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

Forward Looking Statements

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

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)
Three Months Ended	Year Ended
December 31,	September 30,	December 31,
2017	2016	2017	2017	2016
Revenue
Proppant system rental	$	20,093	$	5,915	$	15,062	$	54,653	$	14,594
Proppant system services	4,906	1,374	3,416	12,537	3,563
Proppant inventory software services	205	—	—	205	—
Total revenue	25,204	7,289	18,478	67,395	18,157
Operating costs and expenses
Cost of proppant system rental (excluding $2,044, $934, and $1,523 of depreciation and amortization for the three months ended December 31, 2017 and 2016 and September 30, 2017, respectively, and $5,792 and $3,352 for the years ended December 31, 2017 and 2016, respectively, shown separately)	1,033	250	641	2,627	1,431
Cost of proppant system services (excluding $178, $49, and $129 of depreciation and amortization for the three months ended December 31, 2017 and 2016 and September 30, 2017, respectively, and $461 and $160 for the years ended December 31, 2017 and 2016, respectively, shown separately)	5,544	1,615	3,933	14,184	4,916
Cost of proppant inventory software services (excluding $42 of depreciation and amortization for the three months and year ended December 31, 2017, show separately)	76	—	—	76	—
Depreciation and amortization	2,359	1,053	1,742	6,635	3,792
Salaries, benefits and payroll taxes	3,522	1,069	2,942	9,209	3,061
Selling, general and administrative (excluding $95, $40 and $90 of depreciation and amortization for the three months ended December 31, 2017 and 2016 and September 30, 2017, respectively, and $340 and $250 for the years ended December 31, 2017 and 2016, respectively, shown separately)	1,424	254	1,176	5,077	2,096
Other operating expenses	153	—	77	4,126	—
Total operating cost and expenses	14,111	4,241	10,511	41,934	15,296
Operating income	11,093	3,048	7,967	25,461	2,861
Interest expense	(26	)	(9	)	(27	)	(97	)	(23	)
Income (loss) pursuant to Tax Receivable Agreements	22,939	—	83	23,022	—
Other income	—	1	—	—	8
Total other income (expense)	22,913	(8	)	56	22,925	(15	)
Income before income tax expense	34,006	3,040	8,023	48,386	2,846
Provision for income taxes	24,762	17	617	25,899	43
Net income	9,244	3,023	7,406	22,487	2,803
Less: net income loss related to Solaris LLC	—	(3,023	)	—	(3,665	)	(2,803	)
Less: net income related to non-controlling interests	(7,137	)	—	(6,027	)	(15,186	)	—
Net income attributable to Solaris	$	2,107	$	—	$	1,379	$	3,636	$	—
Earnings per share of Class A common stock – basic (1)	$	0.13	$	—	$	0.13	$	0.28	$	—
Earnings per share of Class A common stock – diluted (1)	$	0.13	$	—	$	0.12	$	0.27	$	—
Basic weighted average shares of Class A common stock outstanding (1)	15,120	—	10,100	12,117	—
Diluted weighted average shares of Class A common stock outstanding (1)	15,508	—	10,563	12,482	—

(1) – Represents earnings per share of Class A common stock and
weighted average shares of Class A common stock outstanding for the
period following the reorganization transactions and IPO.

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)
December 31,	December 31,
2017	2016
Assets
Current assets:
Cash	$	63,421	$	3,568
Accounts receivable, net	12,979	4,510
Prepaid expenses and other current assets	3,622	403
Inventories	7,532	1,365
Total current assets	87,554	9,846
Property, plant and equipment, net	151,163	54,350
Goodwill	17,236	13,004
Intangible assets, net	5,335	36
Deferred tax assets	25,512	—
Other assets	260	—
Total assets	$	287,060	$	77,236
Liabilities and Stockholders'/Members’ Equity
Current liabilities:
Accounts payable	$	5,000	$	705
Accrued liabilities	15,468	2,144
Current portion of capital lease obligations	33	26
Current portion of notes payable	—	169
Current portion of senior secured credit facility	—	31
Total current liabilities	20,501	3,075
Capital lease obligations, net of current portion	179	213
Notes payable, net of current portion	—	282
Senior secured credit facility, net of current portion	—	2,320
Payables related to parties pursuant to tax receivable agreement	24,675	—
Other long-term liabilities	145	—
Total liabilities	45,500	5,890
Commitments and contingencies
Stockholders' and members’ equity
Members’ equity	—	69,267
Preferred stock, $0.01 par value, 50,000 shares authorized, none issued and outstanding	—	—
Class A common stock, $0.01 par value, 600,000 shares authorized, 19,027 issued and 19,011 outstanding as of December 31, 2017 and none issued and outstanding as of December 31, 2016	190	—
Class B common stock, $0.00 par value, 180,000 shares authorized, 26,810 shares issued and outstanding as of December 31, 2017 and none issued and outstanding as of December 31, 2016	—	—
Additional paid-in capital	121,727	—
Accumulated earnings	3,636	2,079
Treasury stock (at cost), 16 shares and 0 shares as of December 31, 2017 and 2016, respectively	(261	)	—
Total stockholders' equity attributable to Solaris and members' equity	125,292	71,346
Non-controlling interest	116,268	—
Total stockholders' and members' equity	241,560	71,346
Total liabilities, stockholders' and members’ equity	$	287,060	$	77,236

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
For the Year Ended December 31,
2017	2016
Cash flows from operating activities:
Net income	$	22,487	$	2,803
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	6,635	3,792
Loss on disposal of asset	498	—
Provision for bad debt	—	131
Stock-based compensation	3,701	127
Amortization of debt issuance costs	51	4
Change in payables related to parties pursuant to tax receivable agreement	(23,022	)	—
Deferred income tax expense	25,652	—
Other	(28	)	—
Changes in assets and liabilities:
Accounts receivable	(8,469	)	(3,065	)
Prepaid expenses and other assets	(3,273	)	109
Inventories	(7,532	)	327
Accounts payable	4,224	41
Accrued liabilities	5,805	252
Net cash provided by operating activities	26,729	4,521
Cash flows from investing activities:
Investment in property, plant and equipment	(93,912	)	(10,899	)
Cash paid for Railtronix™ acquisition	(5,000	)	—
Investment in intangible assets	(72	)	(36	)
Net cash used in investing activities	(98,984	)	(10,935	)
Cash flows from financing activities:
Payments under capital leases	(27	)	(25	)
Payments under notes payable	(451	)	(211	)
Proceeds from borrowings under the credit facility	3,000	2,500
Repayment of credit facility	(5,500	)	—
Payments related to debt issuance costs	(111	)	(153	)
Proceeds from members’ contributions	—	948
Proceeds from issuance of Class A common stock sold in initial public offering, net of offering costs	111,075	—
Proceeds from issuance of Class A common stock sold in secondary offering, net of offering costs	44,684	—
Distributions paid to unit and option holders	(25,818	)	—
Proceeds from pay down of promissory note related to membership units	5,256	—
Net cash provided by financing activities	132,108	3,059
Net increase (decrease) in cash	59,853	(3,355	)
Cash at beginning of period	3,568	6,923
Cash at end of period	$	63,421	$	3,568
Non-cash activities
Investing:
Capitalized depreciation in property, plant and equipment	$	668	$	674
Property and equipment additions incurred but not paid at year-end	7,765	264
Issuance of shares in acquisition	4,505	—
Financing:
Notes payable issued for property, plant and equipment	—	397
Accrued interest from notes receivable issued for membership units	—	327
Cash paid for:
Interest	104	20
Income taxes	45	35

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES
RECONCILIATION
OF GAAP TO NON-GAAP FINANCIAL INFORMATION — ADJUSTED EBITDA
(In
thousands)
(Unaudited)

We view EBITDA and Adjusted EBITDA as important indicators of
performance. We define EBITDA as net income (loss), plus
(i) depreciation and amortization expense, (ii) interest expense and
(iii) income tax expense, including franchise taxes. We define Adjusted
EBITDA as EBITDA plus (i) unit-based compensation expense and
(ii) certain non-cash charges and unusual or non-recurring charges.

We believe that our presentation of EBITDA and Adjusted EBITDA provides
useful information to investors in assessing our financial condition and
results of operations. Net income is the GAAP measure most directly
comparable to EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA
should not be considered alternatives to net income presented in
accordance with GAAP. Because EBITDA and Adjusted EBITDA may be defined
differently by other companies in our industry, our definitions of
EBITDA and Adjusted EBITDA may not be comparable to similarly titled
measures of other companies, thereby diminishing their utility. The
following table presents a reconciliation of Net income (loss) to EBITDA
and Adjusted EBITDA for each of the periods indicated.

Three months ended	Year ended
December 31,	September 30,	December 31,
2017	2016	2017	2017	2016
Net income	$	9,244	$	3,023	$	7,406	$	22,487	$	2,803
Depreciation and amortization	2,359	1,053	1,742	6,635	3,792
Interest expense, net	26	9	27	97	23
Income taxes (1)	24,762	17	617	25,899	43
EBITDA	$	36,391	$	4,102	$	9,792	$	55,118	$	6,661
IPO bonuses (2)	581	—	617	4,627	—
Stock-based compensation expense (3)	1,039	19	795	2,211	127
Loss on disposal of assets	47	—	41	498	—
Non-recurring organizational costs (4)	—	—	—	348	—
Change in payables related to parties pursuant to tax receivable agreement (5)	(22,939	)	—	(83	)	(23,022	)	—
Other (6)	107	—	36	143	—
Adjusted EBITDA	$	15,226	$	4,121	$	11,198	$	39,923	$	6,788