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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2025
or
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-38090
SOLARIS ENERGY INFRASTRUCTURE, INC.
(Exact name of registrant as specified in its charter)
|
|
Delaware |
81-5223109 |
(State or other jurisdiction |
(I.R.S. Employer |
|
|
|
9651 Katy Freeway, Suite 300 Houston, Texas |
77024 |
(Address of principal executive offices) |
(Zip code) |
(281) 501-3070
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
|
|
|
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Class A Common Stock, $0.01 par value |
“SEI” |
New York Stock Exchange NYSE Texas, Inc. |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
|
|
|
Large accelerated filer |
☐ |
Accelerated filer |
☒ |
Non-accelerated filer |
☐ |
Smaller reporting company |
☒ |
|
|
Emerging growth company |
☐ |
If an emerging growth company indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of July 30, 2025, the registrant had 44,603,740 shares of Class A common stock, $0.01 par value per share, and 22,979,143 shares of Class B common stock, $0.00 par value per share, outstanding.
SOLARIS ENERGY INFRASTRUCTURE, INC.
TABLE OF CONTENTS
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Page |
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3 |
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3 |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
30 |
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36 |
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37 |
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38 |
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38 |
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38 |
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41 |
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42 |
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42 |
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42 |
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43 |
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45 |
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i
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Quarterly Report”) includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which involve risks, uncertainties and assumptions. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “could,” “may,” “continue,” “predict,” “potential,” “plan,” “will,” “should” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Our forward-looking statements include statements about our business strategy, industry, future profitability, expected capital expenditures and the impact of such expenditures on our performance, management changes, current and potential future long-term contracts, our capital programs and our future business and financial performance. In addition, our forward-looking statements address the various risks and uncertainties associated with extraordinary market environments and the expected impact on our businesses, results of operations, and earnings.
A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. We believe that we have chosen these assumptions or bases in good faith and that they are reasonable. You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the following list to be a complete statement of all potential risks and uncertainties. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include:
| ● | the level of domestic spending and access to capital markets which we serve, namely (i) power generation and (ii) the oil and natural gas industry and uncertainty regarding the future actions of oil producers, including the members of the Organization of the Petroleum Exporting Countries (OPEC) and Russia and the actions taken to set, maintain or cut production levels; |
| ● | changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements, and the impact of such policies on us, our customers and the global economic environment; |
| ● | the success of Stateline (as defined in Note 2. “Variable Interest Entities”) and its impact on the financial condition and results of operations of our Solaris Power Solutions segment; |
| ● | developments and uncertainty in the global economy and the resulting impacts to the demand and supply for power generation or crude oil and natural gas or volatility of the prices for such projects, and therefore the demand for the services we provide and the commercial opportunities available to us; |
| ● | geopolitical risks, including the war between Russia and Ukraine, the Israel and Hamas conflict and continued hostilities in the Middle East which could each affect the stability and continued recovery of oil and gas markets; |
| ● | uncertainty regarding methods by which the growing demand for power generation will be met in both the short and long term; |
| ● | consolidation amongst current or potential customers that could affect demand for our products and services; |
| ● | inflationary risks, increased interest rates, central bank policy, bank failures and associated liquidity risks and supply chain constraints, including changes in market price and availability of materials and labor; |
| ● | significant changes in the transportation industries or fluctuations in transportation costs or the availability or reliability of transportation that service our business; |
| ● | large or multiple customer defaults, including defaults resulting from actual or potential insolvencies; |
1
| ● | epidemics or pandemics, including the effects of related public health concerns and the impact of continued actions taken by governmental authorities and other third parties in response to pandemics and their impact on commodity prices, supply and demand considerations and storage capacity; |
| ● | technological advancements in well completion technologies and our ability to expand our product and service offerings; |
| ● | competitive conditions in our industry; |
| ● | inability to fully protect our intellectual property rights; |
| ● | actions taken by our customers, competitors and third-party operators; |
| ● | changes in the availability and cost of capital; |
| ● | our ability to successfully implement our business strategy; |
| ● | increases in tax rates or the enactment of taxes that specifically impact exploration and production related operations resulting in an increase in the amount of taxes owed by us; |
| ● | the effects of existing and future laws, rulings, governmental regulations and accounting standards and statements (or the interpretation thereof) on us and our customers; |
| ● | cyber-attacks targeting systems and infrastructure used by the power generation and oil and natural gas industries; |
| ● | the effects of future and pending litigation, including a federal securities lawsuit styled Stephen Pirello v. Solaris Energy Infrastructure, Inc., et al., Case No. 4:25-cv-01455, filed in the United States District Court for the Southern District of Texas; |
| ● | credit markets; |
| ● | business acquisitions, including the acquisition of Mobile Energy Rentals LLC (“MER” and such acquisition, the “MER Acquisition”); |
| ● | natural or man-made disasters and other external events that may disrupt our manufacturing operations; |
| ● | environmental and climate change regulations and policies, and the impact of such regulations and policies on us and our customers; |
| ● | the timing of regulatory proceedings and approvals, and the impact of such proceedings and approvals on us and our customers; |
| ● | health, safety and environmental risks; |
| ● | uncertainty regarding our future operating results; and |
| ● | plans, objectives, expectations and intentions contained in this Quarterly Report that are not historical. |
All forward-looking statements speak only as of the date of this Quarterly Report. You should not place undue reliance on our forward-looking statements. Although forward-looking statements reflect our good faith beliefs at the time they are made, forward-looking statements involve known and unknown risks, uncertainties and other factors, including the factors described under Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 and under Part II, Item 1A. “Risk Factors” of this Quarterly Report and in our other filings with the United States Securities and Exchange Commission (the “SEC”), which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements.
2
We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.
3
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
SOLARIS ENERGY INFRASTRUCTURE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited)
|
|
June 30, |
|
December 31, |
||
|
|
2025 |
|
2024 |
||
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
99,626 |
|
$ |
114,255 |
Restricted cash |
|
|
39,416 |
|
|
45,612 |
Accounts receivable, net of allowances for credit losses of $723 and $681, respectively |
|
|
114,070 |
|
|
71,774 |
Prepaid expenses and other current assets |
|
|
17,530 |
|
|
8,387 |
Inventories |
|
|
11,849 |
|
|
10,948 |
Total current assets |
|
|
282,491 |
|
|
250,976 |
Property, plant and equipment, net |
|
|
287,841 |
|
|
298,828 |
Equipment held for lease, net |
|
|
671,741 |
|
|
339,932 |
Non-current inventories |
|
|
1,572 |
|
|
1,693 |
Non-current receivables, net of allowances for credit losses of $348 and $654, respectively |
|
|
— |
|
|
1,069 |
Operating lease right-of-use assets |
|
|
9,546 |
|
|
9,966 |
Goodwill |
|
|
103,985 |
|
|
103,985 |
Intangible assets, net |
|
|
65,196 |
|
|
71,521 |
Deferred tax assets, net |
|
|
44,108 |
|
|
43,574 |
Other assets |
|
|
6,250 |
|
|
1,337 |
Total assets |
|
$ |
1,472,730 |
|
$ |
1,122,881 |
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
41,163 |
|
$ |
21,092 |
Accrued liabilities |
|
|
25,202 |
|
|
23,159 |
Deferred revenue |
|
|
3,880 |
|
|
4,924 |
Payables related to Tax Receivable Agreement, current portion |
|
|
— |
|
|
3,610 |
Finance lease liabilities, current portion |
|
|
1,862 |
|
|
2,307 |
Operating lease liabilities, current portion |
|
|
1,737 |
|
|
1,599 |
Long-term debt, current portion |
|
|
16,714 |
|
|
8,125 |
Other current liabilities |
|
|
149 |
|
|
717 |
Total current liabilities |
|
|
90,707 |
|
|
65,533 |
Long-term debt, net of current portion |
|
|
369,518 |
|
|
307,605 |
Convertible notes |
|
|
149,267 |
|
|
— |
Payables related to Tax Receivable Agreement, net of current portion |
|
|
73,730 |
|
|
73,730 |
Operating lease liabilities, net of current portion |
|
|
7,533 |
|
|
8,058 |
Finance lease liabilities, net of current portion |
|
|
1,608 |
|
|
1,182 |
Other long-term liabilities |
|
|
44 |
|
|
44 |
Total liabilities |
|
|
692,407 |
|
|
456,152 |
Commitments and contingencies (Note 17) |
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
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, 40,598 shares and 38,013 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively |
|
|
386 |
|
|
359 |
Class B common stock, $0.00 par value, 180,000 shares authorized, 26,979 shares and 29,107 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively; convertible into Class A common stock on a one-for-one basis |
|
|
— |
|
|
— |
Additional paid-in capital |
|
|
373,368 |
|
|
337,598 |
Retained earnings |
|
|
25,385 |
|
|
17,664 |
Total stockholders' equity attributable to Solaris Energy Infrastructure, Inc. |
|
|
399,139 |
|
|
355,621 |
Non-controlling interest |
|
|
381,184 |
|
|
311,108 |
Total stockholders' equity |
|
|
780,323 |
|
|
666,729 |
Total liabilities and stockholders' equity |
|
$ |
1,472,730 |
|
$ |
1,122,881 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
SOLARIS ENERGY INFRASTRUCTURE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue |
|
$ |
87,435 |
|
$ |
69,640 |
|
$ |
174,661 |
|
$ |
134,275 |
Service revenue - related parties |
|
|
— |
|
|
4,246 |
|
|
— |
|
|
7,501 |
Leasing revenue |
|
|
61,893 |
|
|
— |
|
|
100,999 |
|
|
— |
Total revenue |
|
|
149,328 |
|
|
73,886 |
|
|
275,660 |
|
|
141,776 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services, excluding depreciation and amortization |
|
|
54,023 |
|
|
46,131 |
|
|
106,182 |
|
|
86,018 |
Cost of leasing revenue, excluding depreciation |
|
|
25,226 |
|
|
— |
|
|
40,777 |
|
|
— |
Non-leasing depreciation and amortization |
|
|
12,240 |
|
|
9,565 |
|
|
25,026 |
|
|
19,499 |
Depreciation of leasing equipment |
|
|
6,137 |
|
|
— |
|
|
13,415 |
|
|
— |
Gain on reversal of property tax contingency |
|
|
— |
|
|
(2,483) |
|
|
— |
|
|
(2,483) |
Selling, general and administrative |
|
|
14,899 |
|
|
8,259 |
|
|
30,173 |
|
|
16,249 |
Other operating expenses, net |
|
|
1,234 |
|
|
560 |
|
|
2,463 |
|
|
683 |
Total operating costs and expenses |
|
|
113,759 |
|
|
62,032 |
|
|
218,036 |
|
|
119,966 |
Operating income |
|
|
35,569 |
|
|
11,854 |
|
|
57,624 |
|
|
21,810 |
Interest expense, net |
|
|
(5,482) |
|
|
(685) |
|
|
(10,653) |
|
|
(1,484) |
Income before income tax expense |
|
|
30,087 |
|
|
11,169 |
|
|
46,971 |
|
|
20,326 |
Provision for income taxes |
|
|
(5,958) |
|
|
(1,345) |
|
|
(9,874) |
|
|
(3,202) |
Net income |
|
|
24,129 |
|
|
9,824 |
|
|
37,097 |
|
|
17,124 |
Less: net income related to non-controlling interests |
|
|
(12,174) |
|
|
(3,616) |
|
|
(19,822) |
|
|
(6,599) |
Net income attributable to Solaris Energy Infrastructure, Inc. |
|
|
11,955 |
|
|
6,208 |
|
|
17,275 |
|
|
10,525 |
Less: income attributable to participating securities |
|
|
(553) |
|
|
(410) |
|
|
(825) |
|
|
(676) |
Net income attributable to Class A common shareholders |
|
$ |
11,402 |
|
$ |
5,798 |
|
$ |
16,450 |
|
$ |
9,849 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share of Class A common stock – basic |
|
$ |
0.30 |
|
$ |
0.20 |
|
$ |
0.44 |
|
$ |
0.35 |
Earnings per share of Class A common stock – diluted |
|
$ |
0.30 |
|
$ |
0.20 |
|
$ |
0.44 |
|
$ |
0.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted-average shares of Class A common stock outstanding |
|
|
37,818 |
|
|
28,335 |
|
|
37,002 |
|
|
28,461 |
Diluted weighted-average shares of Class A common stock outstanding |
|
|
37,818 |
|
|
28,335 |
|
|
37,002 |
|
|
28,461 |
]
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
SOLARIS ENERGY INFRASTRUCTURE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands, except per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A |
|
Class B |
|
Additional |
|
|
|
Non- |
|
Total |
||||||||||
|
|
Common Stock |
|
Common Stock |
|
Paid-in |
|
Retained |
|
controlling |
|
Stockholders' |
||||||||||
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Capital |
|
Earnings |
|
Interest |
|
Equity |
||||||
Balance at December 31, 2024 |
|
38,013 |
|
$ |
359 |
|
29,107 |
|
$ |
— |
|
$ |
337,598 |
|
$ |
17,664 |
|
$ |
311,108 |
|
$ |
666,729 |
Stock-based compensation |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
1,918 |
|
|
— |
|
|
1,534 |
|
|
3,452 |
Net effect of deferred taxes related to the vesting of restricted stock |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
4,513 |
|
|
— |
|
|
— |
|
|
4,513 |
Vesting of restricted stock |
|
— |
|
|
9 |
|
— |
|
|
— |
|
|
5,726 |
|
|
— |
|
|
(5,735) |
|
|
— |
Grants of restricted stock, net of forfeitures |
|
722 |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Cancelled shares withheld for taxes from vesting of restricted stock |
|
(297) |
|
|
(3) |
|
— |
|
|
— |
|
|
(7,052) |
|
|
— |
|
|
(3,078) |
|
|
(10,133) |
Distributions to non-controlling interest unitholders |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(4,696) |
|
|
(4,696) |
Dividends paid ($0.12 per share of Class A common stock) |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
(4,686) |
|
|
— |
|
|
(4,686) |
Other |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
(81) |
|
|
— |
|
|
— |
|
|
(81) |
Net income |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
5,320 |
|
|
7,648 |
|
|
12,968 |
Balance at March 31, 2025 |
|
38,438 |
|
$ |
365 |
|
29,107 |
|
$ |
— |
|
$ |
342,622 |
|
$ |
18,298 |
|
$ |
306,781 |
|
$ |
668,066 |
Exchange of Solaris LLC units and Class B common stock for Class A common stock |
|
2,128 |
|
|
21 |
|
(2,128) |
|
|
— |
|
|
22,689 |
|
|
— |
|
|
(22,710) |
|
|
— |
Net effect of deferred taxes related to the exchange of Solaris LLC units and Class B common stock for Class A common stock |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
5,009 |
|
|
— |
|
|
— |
|
|
5,009 |
Stock-based compensation |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
3,102 |
|
|
— |
|
|
2,266 |
|
|
5,368 |
Vesting of restricted stock |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
98 |
|
|
— |
|
|
(98) |
|
|
— |
Grants of restricted stock, net of forfeitures |
|
36 |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Cancelled shares withheld for taxes from vesting of restricted stock |
|
(4) |
|
|
— |
|
— |
|
|
— |
|
|
(64) |
|
|
— |
|
|
(15) |
|
|
(79) |
Distributions to non-controlling interest unitholders |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3,237) |
|
|
(3,237) |
Capital contribution from non-controlling interest in Stateline |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
86,023 |
|
|
86,023 |
Dividends paid ($0.12 per share of Class A common stock) |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
(4,868) |
|
|
— |
|
|
(4,868) |
Other |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
(88) |
|
|
— |
|
|
— |
|
|
(88) |
Net income |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
11,955 |
|
|
12,174 |
|
|
24,129 |
Balance at June 30, 2025 |
|
40,598 |
|
$ |
386 |
|
26,979 |
|
$ |
— |
|
$ |
373,368 |
|
$ |
25,385 |
|
$ |
381,184 |
|
$ |
780,323 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
SOLARIS ENERGY INFRASTRUCTURE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands, except per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A |
|
Class B |
|
Additional |
|
|
|
Non- |
|
Total |
||||||||||
|
|
Common Stock |
|
Common Stock |
|
Paid-in |
|
Retained |
|
controlling |
|
Stockholders' |
||||||||||
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Capital |
|
Earnings |
|
Interest |
|
Equity |
||||||
Balance at December 31, 2023 |
|
30,448 |
|
$ |
290 |
|
13,674 |
|
$ |
— |
|
$ |
188,379 |
|
$ |
17,314 |
|
$ |
109,597 |
|
$ |
315,580 |
Share repurchases and retirements |
|
(1,108) |
|
|
(11) |
|
— |
|
|
— |
|
|
(7,031) |
|
|
(858) |
|
|
(233) |
|
|
(8,133) |
Net effect of deferred tax asset and payables related to the vesting of restricted stock |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
(422) |
|
|
— |
|
|
— |
|
|
(422) |
Stock-based compensation |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
1,581 |
|
|
— |
|
|
770 |
|
|
2,351 |
Grants of restricted stock, net of forfeitures |
|
1,175 |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Vesting of restricted stock |
|
— |
|
|
6 |
|
— |
|
|
— |
|
|
1,686 |
|
|
— |
|
|
(1,692) |
|
|
— |
Vesting of performance-based stock units |
|
17 |
|
|
— |
|
— |
|
|
— |
|
|
45 |
|
|
— |
|
|
(45) |
|
|
— |
Cancelled shares withheld for taxes from vesting of restricted stock |
|
(182) |
|
|
(2) |
|
— |
|
|
— |
|
|
(1,515) |
|
|
— |
|
|
(22) |
|
|
(1,539) |
Distributions to non-controlling interest unitholders |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,641) |
|
|
(1,641) |
Dividends paid ($0.12 per share of Class A common stock) |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
(3,648) |
|
|
— |
|
|
(3,648) |
Net income |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
4,317 |
|
|
2,983 |
|
|
7,300 |
Balance at March 31, 2024 |
|
30,350 |
|
$ |
283 |
|
13,674 |
|
$ |
— |
|
$ |
182,723 |
|
$ |
17,125 |
|
$ |
109,717 |
|
$ |
309,848 |
Stock-based compensation |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
1,905 |
|
|
— |
|
|
919 |
|
|
2,824 |
Grants of restricted stock, net of forfeitures |
|
(8) |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Vesting of restricted stock |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
29 |
|
|
— |
|
|
(29) |
|
|
— |
Cancelled shares withheld for taxes from vesting of restricted stock |
|
(4) |
|
|
— |
|
— |
|
|
— |
|
|
(31) |
|
|
— |
|
|
— |
|
|
(31) |
Distributions to non-controlling interest unitholders |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,641) |
|
|
(1,641) |
Dividends paid ($0.12 per share of Class A common stock) |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
(3,641) |
|
|
— |
|
|
(3,641) |
Net income |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
6,208 |
|
|
3,616 |
|
|
9,824 |
Balance at June 30, 2024 |
|
30,338 |
|
$ |
283 |
|
13,674 |
|
$ |
— |
|
$ |
184,626 |
|
$ |
19,692 |
|
$ |
112,582 |
|
$ |
317,183 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
SOLARIS ENERGY INFRASTRUCTURE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
Six Months Ended |
||||
|
|
June 30, |
||||
|
|
2025 |
|
2024 |
||
Cash flows from operating activities: |
|
|
|
|
|
|
Net income |
|
$ |
37,097 |
|
$ |
17,124 |
Adjustment to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
38,441 |
|
|
19,499 |
Stock-based compensation |
|
|
12,198 |
|
|
4,876 |
Deferred income tax expense |
|
|
9,056 |
|
|
2,908 |
Other |
|
|
1,500 |
|
|
482 |
Changes in assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
(41,776) |
|
|
(4,480) |
Accounts receivable - related party |
|
|
— |
|
|
(2,044) |
Prepaid expenses and other assets |
|
|
(1,582) |
|
|
(2,439) |
Inventories |
|
|
(780) |
|
|
(2,104) |
Accounts payable |
|
|
1,824 |
|
|
3,303 |
Accrued liabilities |
|
|
(1,318) |
|
|
1,109 |
Deferred revenue |
|
|
(1,044) |
|
|
— |
Property tax contingency |
|
|
— |
|
|
(2,483) |
Cash settlement of stock-based compensation |
|
|
(3,713) |
|
|
— |
Net cash provided by operating activities |
|
|
49,903 |
|
|
35,751 |
Cash flows from investing activities: |
|
|
|
|
|
|
Investment in property, plant and equipment and equipment held for lease |
|
|
(329,454) |
|
|
(4,021) |
Other |
|
|
(7,545) |
|
|
381 |
Net cash used in investing activities |
|
|
(336,999) |
|
|
(3,640) |
Cash flows from financing activities: |
|
|
|
|
|
|
Share repurchases and retirements |
|
|
— |
|
|
(8,092) |
Capital contributions from non-controlling interest in Stateline |
|
|
86,023 |
|
|
— |
Distributions to non-controlling interest unitholders |
|
|
(7,933) |
|
|
(3,282) |
Dividends paid to Class A common stock shareholders |
|
|
(9,554) |
|
|
(7,289) |
Payments under finance leases |
|
|
(1,612) |
|
|
(1,214) |
Proceeds from issuance of insurance notes payable |
|
|
149 |
|
|
3,553 |
Payments under insurance premium financing |
|
|
(717) |
|
|
(991) |
Cancelled shares withheld for taxes from vesting of restricted stock |
|
|
(10,212) |
|
|
(1,570) |
Payment of liabilities under Tax Receivable Agreement |
|
|
(3,610) |
|
|
— |
Borrowings from debt financing and convertible notes |
|
|
226,979 |
|
|
4,000 |
Repayments of debt financing |
|
|
— |
|
|
(18,000) |
Payments for debt financing costs |
|
|
(13,242) |
|
|
— |
Net cash provided by (used in) financing activities |
|
|
266,271 |
|
|
(32,885) |
|
|
|
|
|
|
|
Net decrease in cash, cash equivalents and restricted cash |
|
|
(20,825) |
|
|
(774) |
Cash, cash equivalents and restricted cash at beginning of period |
|
|
159,867 |
|
|
5,833 |
Cash, cash equivalents and restricted cash at end of period |
|
$ |
139,042 |
|
$ |
5,059 |
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
Capitalized depreciation in property, plant and equipment |
|
$ |
190 |
|
$ |
232 |
Capitalized stock-based compensation |
|
|
335 |
|
|
300 |
Property, plant and equipment and equipment held for lease additions incurred but not paid at period-end |
|
|
29,459 |
|
|
412 |
Reclassification of assets held for sale to property, plant and equipment |
|
|
— |
|
|
3,000 |
Additions to property, plant, and equipment through finance leases |
|
|
1,689 |
|
|
70 |
Supplemental cash flow disclosure: |
|
|
|
|
|
|
Interest paid, net of capitalized interest |
|
$ |
11,980 |
|
$ |
1,414 |
Interest received |
|
|
2,068 |
|
|
73 |
Income taxes paid, net of refunds |
|
|
782 |
|
|
520 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
SOLARIS ENERGY INFRASTRUCTURE, INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Dollars in millions, except share and per share amounts)
1. Business and Basis of Presentation
Business
Solaris Energy Infrastructure, Inc. (referred to as the “Company,” “we,” “us,” “our” and “Solaris” either individually or together with its consolidated subsidiaries, as the context requires) and its consolidated subsidiaries provide mobile and scalable equipment-based solutions for use in distributed power generation as well as the management of raw materials used in the completion of oil and natural gas wells. Headquartered in Houston, Texas, Solaris serves multiple U.S. end markets, including energy, data centers, and other commercial and industrial sectors. Solaris delivers these offerings through its Solaris Power Solutions and Solaris Logistics Solutions business segments.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared using generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, these financial statements do not include all information or notes required by GAAP for annual financial statements and should be read together with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 5, 2025.
These consolidated financial statements reflect all normal recurring adjustments that are necessary for fair presentation. Operating results for the three and six months ended June 30, 2025 and 2024 are not necessarily indicative of the results that may be expected for the full year or for any interim period.
2. Variable Interest Entities
On April 28, 2025, the Company formed Stateline Power, LLC (“Stateline”), an entity involving Solaris Power Solutions Stateline, LLC (“Stateline Power Solutions”), a newly formed and wholly owned subsidiary of Solaris Energy Infrastructure, LLC (“Solaris LLC”), and CTC Property LLC (“CTC”), a customer of the Company. Solaris LLC is a consolidated subsidiary of the Company.
Stateline was formed to provide off-grid power to CTC’s data center campus pursuant to a long-term equipment rental arrangement. In connection with the formation of Stateline, the Company contributed non-cash assets valued at $86.4 million, consisting primarily of progress payments on power generation equipment intended to be owned by Stateline and pre-funded expenses, in exchange for a 50.1% equity interest in Stateline. CTC contributed $86.0 million in cash in exchange for the remaining 49.9% equity interest. CTC subsequently assigned its interest in Stateline to MZX Tech LLC (“MZX”). MZX is an affiliate of and under common control with CTC.
Concurrent with its formation, Stateline entered into (i) a management agreement with Stateline Power Solutions Stateline Operating, LLC (“Stateline Operator”), a wholly owned subsidiary of Solaris LLC, under which Stateline Operator manages Stateline’s day-to-day operations and administrative functions, (ii) a master equipment rental agreement (“Rental Agreement”) with CTC, under which Stateline will lease power generation equipment to CTC for use at its data center facility and (iii) a bill of sale, assignment and assumption agreement under which Solaris LLC assigned to Stateline certain purchase orders related to the equipment required to service the Rental Agreement. CTC subsequently assigned its interest in the Rental Agreement to MZX.
As of June 30, 2025, no lease under the Rental Agreement had commenced. Lease commencement is contingent upon the completion of equipment deployment and commissioning activities, which are expected to begin by the end of 2025. Accordingly, no rental revenue was recognized during the three and six months ended June 30, 2025.
The Company evaluated its interest in Stateline under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation, and determined that Stateline is a variable interest entity because its equity investment at risk is not sufficient to permit it to finance its activities without additional subordinated financial support and the equity holders as a group lack the characteristics of a controlling financial interest.
8
The Company, through Solaris LLC, is the primary beneficiary of Stateline because it has the power to direct the activities that most significantly impact Stateline’s economic performance. This power is derived primarily from its control of Stateline Operator, which has broad authority over operations, budgeting, and expenditures, as well as the Company’s exclusive rights to manage and redeploy Stateline’s assets subject to certain conditions. Stateline’s governance structure includes a board with two representatives appointed by the Company and two by MZX, but the Company’s operational and asset management rights establish its power over the activities that most significantly affect Stateline’s economic performance. The Company also has the obligation to absorb losses or the right to receive benefits that could potentially be significant to Stateline. As a result, the Company consolidates Stateline’s financial position and results of operations in its condensed consolidated financial statements within the Solaris Power Solutions segment.
As the Company is the primary beneficiary of Stateline under ASC 810, it controls Stateline for consolidation purposes. Accordingly, the contribution of assets by Solaris LLC to Stateline was accounted for as a common control transaction. The assets transferred were recognized at their historical carrying amounts, consistent with the treatment that would have applied had the transfer not occurred. No gain or loss was recognized upon consolidation. The contribution of cash by MZX resulted in the recognition of a non-controlling interest representing MZX’s 49.9% equity ownership. This non-controlling interest is presented within a single line item in equity in the Company’s condensed consolidated balance sheets, together with other non-controlling interests. Refer to Note 13. “Equity and Non-controlling Interest,” for a breakdown of non-controlling interest by entity.
On May 23, 2025, Stateline entered into a delayed draw term loan facility with a lender to finance the power generation equipment to be used under the Rental Agreement. Refer to Note 10. “Debt – Stateline Term Loan” for additional information.
The Company has not provided any financial support to Stateline during the three and six months ended June 30, 2025, that it was not contractually required to provide, and it has no current intention to provide such support beyond its existing obligations. The Company’s maximum exposure to loss from its involvement with Stateline is limited to its equity investment of $86.4 million as of June 30, 2025.
The assets of Stateline can be used only to settle its obligations, and creditors of Stateline do not have recourse to the general credit of the Company or its other subsidiaries.
The following table summarizes Stateline’s assets and liabilities, included in the Company’s condensed consolidated balance sheet as of June 30, 2025.
|
|
June 30, |
|
|
|
2025 |
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
|
$ |
40.7 |
Prepaid expenses and other current assets |
|
|
0.6 |
Total current assets |
|
|
41.3 |
Equipment held for lease, net |
|
|
199.9 |
Other assets |
|
|
5.0 |
Total assets |
|
$ |
246.2 |
Liabilities |
|
|
|
Current liabilities: |
|
|
|
Accrued liabilities |
|
$ |
0.6 |
Long-term debt, current portion |
|
|
0.5 |
Total current liabilities |
|
|
1.1 |
Long-term debt, net of current portion |
|
|
70.7 |
Total liabilities |
|
$ |
71.8 |
9
3. Business Segments
We report two distinct business segments. These segments differ by their revenue-generating activities and align with how our Chief Executive Officer, who is our chief operating decision maker (“CODM”), assesses operating performance and allocates resources.
Our reporting segments are:
| ● | Solaris Power Solutions – provides configurable sets of natural gas-powered mobile turbines and ancillary equipment. This segment primarily leases equipment to data center and energy customers and is focused on continuing to grow its services with these customers as well as across multiple commercial and industrial end-markets. |
| ● | Solaris Logistics Solutions – designs and manufactures specialized equipment that enables the efficient management of raw materials used in the completion of oil and natural gas wells. Solaris’ equipment-based logistics services include field technician support, software solutions, and may also include last mile and mobilization services. |
Our CODM evaluates the performance of our business segments and allocates resources based on Adjusted EBITDA. We define EBITDA as net income plus depreciation and amortization expense, interest expense, and income tax expense. We define Adjusted EBITDA as EBITDA plus stock-based compensation, certain non-cash items and any extraordinary, unusual or non-recurring gains, losses or expenses.
In making resource allocation decisions, our CODM primarily considers budget-to-actual variances in Adjusted EBITDA on a monthly basis.
Summarized financial information by business segment is shown below.
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Solaris Power Solutions |
|
$ |
75.6 |
|
$ |
— |
|
$ |
125.0 |
|
$ |
— |
Solaris Logistics Solutions |
|
|
73.7 |
|
|
73.9 |
|
|
150.7 |
|
|
141.8 |
Total revenues |
|
$ |
149.3 |
|
$ |
73.9 |
|
$ |
275.7 |
|
$ |
141.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
Solaris Power Solutions |
|
$ |
183.5 |
|
$ |
— |
|
$ |
325.6 |
|
$ |
— |
Solaris Logistics Solutions |
|
|
1.5 |
|
|
0.6 |
|
|
3.7 |
|
|
3.7 |
Total segment capital expenditures |
|
$ |
185.0 |
|
$ |
0.6 |
|
$ |
329.3 |
|
$ |
3.7 |
Corporate and other capital expenditures |
|
|
0.1 |
|
|
0.1 |
|
|
0.2 |
|
|
0.3 |
Consolidated capital expenditures |
|
$ |
185.1 |
|
$ |
0.7 |
|
$ |
329.5 |
|
$ |
4.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
Solaris Power Solutions |
|
$ |
45.7 |
|
$ |
— |
|
$ |
77.6 |
|
$ |
— |
Solaris Logistics Solutions |
|
|
22.7 |
|
|
28.2 |
|
|
48.7 |
|
|
54.1 |
Total segment Adjusted EBITDA |
|
$ |
68.4 |
|
$ |
28.2 |
|
$ |
126.3 |
|
$ |
54.1 |
The financial information by business segment for prior periods has been restated to reflect the changes in reportable segments following the MER Acquisition in September 2024.
10
The following table presents a reconciliation of total segment Adjusted EBITDA to income before income tax expense.
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
|
|
|
|
|
||||||||
Total segment Adjusted EBITDA |
|
$ |
68.4 |
|
$ |
28.2 |
|
$ |
126.3 |
|
$ |
54.1 |
Depreciation and amortization |
|
|
(18.4) |
|
|
(9.6) |
|
|
(38.4) |
|
|
(19.5) |
Interest expense, net |
|
|
(5.5) |
|
|
(0.7) |
|
|
(10.7) |
|
|
(1.5) |
Corporate and other expenses (1) |
|
|
(7.8) |
|
|
(7.4) |
|
|
(18.8) |
|
|
(10.6) |
Stock-based compensation expense |
|
|
(5.2) |
|
|
(2.6) |
|
|
(8.5) |
|
|
(4.9) |
Stateline transaction costs (2) |
|
|
(1.3) |
|
|
— |
|
|
(1.8) |
|
|
— |
Credit recoveries (losses) |
|
|
0.3 |
|
|
0.2 |
|
|
(0.5) |
|
|
(0.1) |
Property tax contingency |
|
|
— |
|
|
2.5 |
|
|
— |
|
|
2.5 |
Accrued property tax |
|
|
— |
|
|
1.8 |
|
|
— |
|
|
1.8 |
Acquisition-related costs (3) |
|
|
— |
|
|
(0.9) |
|
|
— |
|
|
(0.9) |
Other (4) |
|
|
(0.4) |
|
|
(0.3) |
|
|
(0.6) |
|
|
(0.6) |
Income before income tax expense |
|
$ |
30.1 |
|
$ |
11.2 |
|
$ |
47.0 |
|
$ |
20.3 |
| (1) | Corporate and other expenses include corporate employee salaries and expenses, corporate headquarters rental, and legal and professional fees. |
| (2) | Represents costs incurred to establish Stateline, including legal fees related to debt amendments to incorporate provisions for the new entity. |
| (3) | Represents costs incurred to affect the MER Acquisition. |
| (4) | Other includes the net effect of loss/gain on disposal of assets and lease terminations, inventory write-offs, and transaction costs incurred for activities related to acquisition opportunities. |
Segment assets are presented below.
|
|
June 30, |
|
December 31, |
||
|
|
2025 |
|
2024 |
||
Segment assets: |
|
|
|
|
|
|
Solaris Power Solutions |
|
$ |
944.8 |
|
$ |
535.3 |
Solaris Logistics Solutions |
|
|
366.9 |
|
|
371.7 |
Total segment assets (1) |
|
$ |
1,311.7 |
|
$ |
907.0 |
Corporate and other assets (2) |
|
|
161.0 |
|
|
215.9 |
Consolidated assets |
|
$ |
1,472.7 |
|
$ |
1,122.9 |
| (1) | Segment assets consist of accounts receivable, prepaid expense, inventories, goodwill and long-lived assets. |
| (2) | Corporate and other assets consist of cash and cash equivalents, restricted cash, prepaid expenses, deferred tax assets and other assets. |
11
Significant segment expenses and other segment items, representing the difference between segment revenue and Adjusted EBITDA, are comprised of the following:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, 2025 |
|
June 30, 2025 |
||||||||
|
|
Solaris Power Solutions |
|
Solaris Logistics Solutions |
|
Solaris Power Solutions |
|
Solaris Logistics Solutions |
||||
|
|
|
|
|
||||||||
Labor cost |
|
$ |
4.7 |
|
$ |
11.6 |
|
$ |
7.3 |
|
$ |
23.3 |
Repairs and maintenance |
|
|
4.1 |
|
|
3.5 |
|
|
7.8 |
|
|
6.0 |
Equipment rental (1) |
|
|
17.5 |
|
|
— |
|
|
26.2 |
|
|
— |
Trucking and mobilizations (2) |
|
|
— |
|
|
32.9 |
|
|
— |
|
|
67.5 |
Other segment items (3) |
|
|
3.6 |
|
|
3.0 |
|
|
6.1 |
|
|
5.2 |
Total segment expenses |
|
$ |
29.9 |
|
$ |
51.0 |
|
$ |
47.4 |
|
$ |
102.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, 2024 |
|
June 30, 2024 |
||||||||
|
|
Solaris Power Solutions |
|
Solaris Logistics Solutions |
|
Solaris Power Solutions |
|
Solaris Logistics Solutions |
||||
|
|
|
|
|
||||||||
Labor cost |
|
$ |
— |
|
$ |
13.9 |
|
$ |
— |
|
$ |
24.9 |
Repairs and maintenance |
|
|
— |
|
|
3.6 |
|
|
— |
|
|
7.1 |
Equipment rental (1) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Trucking and mobilizations (2) |
|
|
— |
|
|
29.7 |
|
|
— |
|
|
49.8 |
Other segment items (3) |
|
|
— |
|
|
(1.5) |
|
|
— |
|
|
5.9 |
Total segment expenses |
|
$ |
— |
|
$ |
45.7 |
|
$ |
— |
|
$ |
87.7 |
| (1) | Equipment rental is considered a significant expense in the Solaris Power Solutions segment. |
| (2) | Trucking and mobilizations are considered a significant expense in the Solaris Logistics Solutions segment. |
| (3) | Other segment items for Solaris Logistics Solutions include facilities and equipment rental, fuel, professional fees, insurance and other costs, while those for Solaris Power Solutions include facilities rental, transportation and freight, professional fees, insurance and other costs. |
4. Summary of Significant Accounting Policies
(a) Recently Issued Accounting Standards
Recently Adopted
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances reportable segment disclosure requirements, primarily by requiring additional information about significant segment expenses. The guidance is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024. The Company adopted this guidance effective January 1, 2024 for annual reporting and on January 1, 2025 for interim periods. The Company has applied the amendments retrospectively to all prior periods presented in the condensed consolidated financial statements. See Note 3. “Business Segments” for further details on segment information.
Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures: Disaggregation of Income Statement Expenses. This update requires entities to disclose specified information about certain costs and expenses, including the amounts related to (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depletion expense, disaggregated within relevant expense captions on the statement of operations. It also requires qualitative descriptions for amounts not separately disaggregated and the total amount of selling expenses, along with the entity’s definition of selling expenses.
12
In January 2025, the FASB issued ASU 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures: Clarifying the Effective Date. The guidance is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently assessing the impact of this ASU on its disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregation of information included in a reporting entity’s income tax disclosures through effective tax rate reconciliation and information on income taxes paid. The guidance is effective for annual periods beginning after December 15, 2024. The Company is in the process of evaluating the potential effects of this ASU on its financial statements but does not expect it will have a material impact.
(b) Consolidation
The condensed consolidated financial statements include the accounts of the Company and its subsidiaries in which the Company has a controlling financial interest. All material intercompany balances and transactions have been eliminated in consolidation.
The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (“VIE”) under US GAAP.
Voting Interest Entities. Voting interest entities are entities in which the total equity investment at risk is sufficient to enable the entity to finance its activities independently and the equity holders have the characteristics of a controlling financial interest, including the power to direct the activities of the entity that most significantly impact its economic performance through voting or similar rights. Voting interest entities are consolidated in accordance with ASC 810, Consolidation, if the Company owns a majority of the voting interests, unless control does not rest with the majority owner (for example, because of veto rights or other substantive participating rights held by non-controlling interest holders).
Variable Interest Entities. VIEs are entities that lack one or more of the characteristics of a voting interest entity, such as sufficient equity at risk to finance their activities without additional subordinated financial support or where the equity holders, as a group, lack the power to direct the activities that most significantly impact the entity’s economic performance. The Company consolidates a VIE in accordance with ASC 810 if it is the primary beneficiary, which occurs when the Company has both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.
The Company reassesses its initial evaluation of whether an entity is a VIE upon the occurrence of certain reconsideration events as defined in ASC 810. The Company also reassesses its determination of whether it is the primary beneficiary of a VIE upon changes in facts and circumstances that could potentially alter its conclusion.
Non-controlling interests represent the portion of profit or loss and net assets attributable to equity interests in consolidated subsidiaries that are not owned by the Company. Non-controlling interests are presented as a separate component of equity in the condensed consolidated balance sheets and as a separate line item in the condensed consolidated statements of operations.
For additional information on the Company’s involvement with VIEs, refer to Note 2. “Variable Interest Entities.”
(c) Use of Estimates
The preparation of these condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the reporting date, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
13
(d) Restricted Cash
Restricted cash includes amounts that are limited in their use due to contractual agreements or are designated for specific purposes and are not readily available for general use. In our condensed consolidated balance sheets, we classify these amounts as restricted cash. As of June 30, 2025 and December 31, 2024, our restricted cash was restricted for capital expenditures for on-order power generation assets.
The following table presents a reconciliation of cash, cash equivalents and restricted cash reported in the condensed consolidated balance sheets that total to the same amounts shown in the condensed consolidated statements of cash flows.
|
|
June 30, |
|
December 31, |
||
|
|
2025 |
|
2024 |
||
Cash and cash equivalents |
|
$ |
99.6 |
|
$ |
114.3 |
Restricted cash |
|
|
39.4 |
|
|
45.6 |
Cash and cash equivalents and restricted cash |
|
$ |
139.0 |
|
$ |
159.9 |
(e) Accounts Receivable and Allowance for Credit Losses
Accounts receivable are stated at the net amount expected to be collected. We record accounts receivable at the invoice amount, plus accrued revenue that is not yet billed, less an estimated allowance for credit losses. Total unbilled revenue included in accounts receivable as of June 30, 2025 and December 31, 2024 was $10.1 million and $9.0 million, respectively.
In our determination of the allowance for credit losses, we pool receivables with similar risk characteristics and consider a number of current conditions, past events and other factors, including the length of time trade accounts receivable are past due, previous loss history and the condition of the general economy and the industry as a whole, and apply an expected loss percentage. The expected credit loss percentage is determined using historical loss data adjusted for current conditions and forecasts of future economic conditions. Along with the expected credit loss percentage approach, we apply a case-by-case review on individual trade receivables when deemed appropriate. The related expense associated with the recognition of the allowance for credit losses was included in other operating expense on our condensed consolidated statements of operations. Adjustments to the allowance may be required depending on how potential issues are resolved and when receivables are collected. Accounts deemed uncollectible are written off against the allowance for credit losses when our customers’ financial condition deteriorates, impairing their ability to make payments, including in cases of customer bankruptcies.
For receivables related to leasing arrangements, we evaluate the collectability of lease payments over the lease term. When it is probable that we will collect substantially all lease payments due under the arrangement, we recognize leasing revenue on a straight-line basis. If collectability is not probable, we recognize leasing revenue on a cash basis. For leasing arrangements, we typically collect the first and last month’s payments at lease inception, which provides a form of collateral. Based on this assessment and our historical experience, we do not maintain a general allowance for uncollectible lease receivables, as no significant losses have been incurred or are expected.
The following activity related to our allowance for credit losses on customer receivables reflects the estimated impact of the current economic environment on our receivable balance.
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Balance at beginning of period |
|
$ |
2.1 |
|
$ |
1.3 |
|
$ |
1.3 |
|
$ |
1.0 |
Provision for credit losses, net of recoveries |
|
|
(0.2) |
|
|
(0.2) |
|
|
0.6 |
|
|
0.1 |
Write-offs |
|
|
(0.8) |
|
|
— |
|
|
(0.8) |
|
|
— |
Balance at end of period |
|
$ |
1.1 |
|
$ |
1.1 |
|
$ |
1.1 |
|
$ |
1.1 |
14
(f) Property, Plant and Equipment and Equipment Held for Lease
Property, plant and equipment, as well as equipment held for lease, are initially recorded at cost, except for assets acquired in a business combination, which are recorded at fair value on the acquisition date. At period-end, these assets are reported at their initial measurement (whether at cost or fair value) less accumulated depreciation.
Depreciation is calculated using the straight-line method over the estimated useful lives of the assets except for turbine engine cores. Turbine engine cores represent a significant component of our turbines and are depreciated using the units of production method based on an expected life of 30,000 fired hours. To reflect this distinct depreciation method and usage-based nature of these assets, turbine engine cores are presented as a separate line item in the table below, Power Generation – Turbine engine core. In prior periods, these assets were depreciated using this same units of production method and included within Power Generation – Ancillary equipment 3-20 years.
We capitalize interest on borrowings directly attributable to the acquisition or construction of certain capital assets. The capitalized interest is included in the cost of the asset and is subsequently depreciated over its estimated useful life.
|
|
Useful Life |
Equipment held for lease |
|
|
Power Generation - Turbine |
|
25 years |
Power Generation - Turbine engine core |
|
30,000 fired hours |
Power Generation - Ancillary equipment |
|
3 - 20 years |
|
|
|
Property, plant and equipment |
|
|
Oil and gas logistics equipment |
|
5 - 15 years |
Machinery and equipment |
|
3 - 12 years |
Furniture and fixtures |
|
5 years |
Computer hardware and software |
|
3 - 10 years |
Vehicles |
|
5 years |
Buildings and leasehold improvements |
|
15 years |
Expenses for maintenance and repairs are charged to operations as incurred, while betterments that increase the value or significantly extend the life of the related assets are capitalized. When assets are sold or disposed of, the related cost and accumulated depreciation are removed from the condensed consolidated balance sheets, and any resulting gain or loss is recognized in the condensed consolidated statement of operations.
Property, plant and equipment and equipment held for lease are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability is assessed by comparing the carrying amount of the asset to its estimated undiscounted future cash flows. If the carrying amount exceeds the estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount exceeds the asset’s fair value.
(g) Convertible Notes
Our convertible notes are classified as convertible debt instruments recorded as liabilities in accordance with ASC 470-20 and are initially recognized at their principal amount, net of issuance costs and any discounts. Issuance costs and discounts are amortized to interest expense over the term of the instrument using the effective interest method. We evaluate each instrument to determine its classification as debt or equity and assess whether embedded features, such as conversion options, require bifurcation and separate accounting as derivatives under ASC 815-15. Bifurcation is required if these features are not clearly and closely related to the host contract and do not meet the scope exception criteria under ASC 815-40. Upon conversion, the carrying amount of the debt is reduced, and the settlement is accounted for based on the terms of the instrument, which may include issuance of common stock, cash payment, or a combination thereof. Interest expense includes the contractual coupon rate and amortization of issuance costs and discounts.
15
(h) Revenue
Service Revenue
We recognize revenue based on the transfer of control to the customer, reflecting the consideration expected to be received in exchange for our services and products. We assess customers’ ability and intention to pay based on factors such as historical payment experience and financial condition, and we typically bill customers on a weekly or monthly basis. Contracts with customers are generally on 30- to 60-day payment terms.
Contracts may include bundled pricing covering multiple performance obligations, such as combinations of systems, mobilization services and sand transportation coordination. In these instances, 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 revenue as control of each product or service is transferred to the customer.
Variable consideration may include discounts, price concessions and incentives. We estimate variable consideration based on the expected amount to be received and accrue revenue to reflect updates related to variable consideration as performance obligations are fulfilled.
Leasing Revenue
Leasing revenue is recognized on a straight-line basis over the lease term, reflecting the consumption of benefits derived from the leased assets. Lease payments are generally fixed, with no significant variable lease payments. Leasing arrangements may be renewed, subject to price negotiations with customers.
Future minimum lease payments to be received under our long-term lessor arrangements as of June 30, 2025, including payments from leases that have already commenced and leases that will commence in the future based on estimated commencement dates, were as follows:
Future Minimum Lease Payments - As of June 30, 2025 |
|
Operating Leases |
|
2025 (remainder of) |
|
$ |
70.5 |
2026 |
|
|
292.7 |
2027 |
|
|
215.7 |
2028 |
|
|
213.4 |
2029 |
|
|
213.4 |
Thereafter |
|
|
473.4 |
|
|
$ |
1,479.1 |
Disaggregation of Revenue
We categorize revenue from contracts with customers by revenue-generating activity, in alignment with our two reportable segments. This includes service revenue recognized under ASC 606, Revenues from Contracts with Customers, and leasing revenue recognized under ASC 842, Leases. The table below presents information on our disaggregated revenue.
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Solaris Power Solutions |
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue |
|
$ |
13.7 |
|
$ |
— |
|
$ |
24.0 |
|
$ |
— |
Leasing revenue |
|
|
61.9 |
|
|
— |
|
|
101.0 |
|
|
— |
Solaris Logistics Solutions |
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue |
|
|
73.7 |
|
|
73.9 |
|
|
150.7 |
|
|
141.8 |
Total revenue |
|
$ |
149.3 |
|
$ |
73.9 |
|
$ |
275.7 |
|
$ |
141.8 |
16
For the three and six months ending June 30, 2025, sublease income totaled to $28.6 million and $36.2 million, respectively, and is presented as leasing revenue in our condensed consolidated statement of operations.
5. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consists of the following:
|
|
June 30, |
|
December 31, |
||
|
|
2025 |
|
2024 |
||
Prepaid expenses and deposits |
|
|
7.3 |
|
|
7.3 |
Short-term loan to third party |
|
|
7.6 |
|
|
— |
Accrued interest receivable |
|
|
0.2 |
|
|
— |
Prepaid purchase orders |
|
|
2.4 |
|
|
0.1 |
Employee retention tax credit |
|
|
— |
|
|
1.0 |
Prepaid expenses and other current assets |
|
$ |
17.5 |
|
$ |
8.4 |
Loan Receivable
On April 3, 2025, the Company, through its subsidiary Solaris Power Solutions, LLC (f/k/a MER), extended a secured demand note receivable to a third party, in the principal amount of $7.6 million and maturity date in the third quarter of 2025. The note is classified as held to maturity, carried at amortized cost and is reported as prepaids and other current assets in the condensed consolidated balance sheet.
As of June 30, 2025, the amortized cost basis of the note was $7.6 million. Management has evaluated the note for expected credit losses under ASC 326 and determined that no allowance was necessary as of June 30, 2025, based on the collateral value, short-term nature, and the borrower's financial condition. Due to the short-term nature of the note receivable and recent issuance, its carrying value approximates fair value.
6. Property, Plant and Equipment
Property, plant and equipment consists of the following:
|
|
June 30, |
|
December 31, |
||
|
|
2025 |
|
2024 |
||
Oil and gas logistics equipment |
|
$ |
456.7 |
|
$ |
447.2 |
Logistics equipment in process |
|
|
11.6 |
|
|
17.1 |
Vehicles |
|
|
13.8 |
|
|
13.9 |
Machinery and equipment |
|
|
8.6 |
|
|
6.4 |
Buildings |
|
|
4.9 |
|
|
4.9 |
Computer hardware and software |
|
|
4.8 |
|
|
4.6 |
Land |
|
|
0.6 |
|
|
0.6 |
Furniture and fixtures |
|
|
1.4 |
|
|
1.4 |
Property, plant and equipment, gross |
|
$ |
502.4 |
|
$ |
496.1 |
Less: accumulated depreciation |
|
|
(214.6) |
|
|
(197.3) |
Property, plant and equipment, net |
|
$ |
287.8 |
|
$ |
298.8 |
During the three months ended June 30, 2025 and 2024, the Company recorded property, plant and equipment depreciation expense of $9.3 million and $9.4 million, respectively. During the six months ended June 30, 2025 and 2024, the Company recorded property, plant and equipment depreciation expense of $18.7 million and $19.1 million, respectively.
17
7. Equipment Held for Lease
Equipment held for lease represents equipment used in our capacity as lessor in leasing activities. The assets classified as equipment held for lease consist of the following:
|
|
June 30, |
|
December 31, |
||
|
|
2025 |
|
2024 |
||
Power Generation - Turbine |
|
$ |
224.2 |
|
$ |
133.6 |
Power Generation - Turbine engine core |
|
|
81.6 |
|
|
39.7 |
Power Generation - Ancillary equipment |
|
|
22.4 |
|
|
19.0 |
Construction in progress |
|
|
362.9 |
|
|
153.6 |
Equipment held for lease, gross |
|
$ |
691.1 |
|
$ |
345.9 |
Less: accumulated depreciation |
|
|
(19.4) |
|
|
(6.0) |
Total equipment held for lease, net |
|
$ |
671.7 |
|
$ |
339.9 |
Construction in progress includes deposits and progress payments (including accrued billings, whether paid or not) for turbines and other equipment that have not yet been delivered. Depreciation of these assets will commence when they are placed in service or ready for their intended use. For the three months ended June 30, 2025, we incurred total interest cost of $10.3 million, of which $4.1 million was recognized as capitalized interest. For the six months ended June 30, 2025, we incurred total interest cost of $18.8 million, of which $6.9 million was recognized as capitalized interest.
For the three and six months ended June 30, 2025, we recorded depreciation expense of $6.1 million and $13.4 million, respectively, related to equipment held for lease. There was no comparable depreciation expense in the three and six months ended June 30, 2024, as these assets were acquired since the third quarter of 2024 as part of the MER Acquisition that established the Solaris Power Solutions segment and its subsequent growth program.
4
8. Intangible Assets
Intangible assets consist of the following.
|
|
|
|
|
Accumulated |
|
Net Book |
||
|
|
Gross |
|
Amortization |
|
Value |
|||
As of June 30, 2025: |
|
|
|
|
|
|
|
|
|
Customer relationships |
|
$ |
66.0 |
|
$ |
(7.5) |
|
$ |
58.5 |
Trademarks |
|
|
8.0 |
|
|
(1.3) |
|
|
6.7 |
Software & patents |
|
|
0.1 |
|
|
(0.1) |
|
|
— |
Total identifiable intangibles |
|
$ |
74.1 |
|
$ |
(8.9) |
|
$ |
65.2 |
|
|
|
|
|
|
|
|
|
|
As of December 31, 2024: |
|
|
|
|
|
|
|
|
|
Customer relationships |
|
$ |
66.0 |
|
$ |
(2.0) |
|
$ |
64.0 |
Trademarks |
|
|
8.0 |
|
|
(0.5) |
|
|
7.5 |
Software & patents |
|
|
0.1 |
|
|
(0.1) |
|
|
— |
Total identifiable intangibles |
|
$ |
74.1 |
|
$ |
(2.6) |
|
$ |
71.5 |
During the three months ended June 30, 2025 and 2024, we recorded amortization expense of $2.9 million and $0.2 million, respectively. During the six months ended June 30, 2025 and 2024, we recorded amortization expense of $6.3 million and $0.4 million, respectively.
18
9. Accrued Liabilities
Accrued liabilities were comprised of the following at June 30, 2025 and December 31, 2024:
|
|
June 30, |
|
December 31, |
||
|
|
2025 |
|
2024 |
||
Capital expenditures |
|
$ |
1.6 |
|
$ |
— |
Employee-related expenses |
|
|
10.2 |
|
|
9.5 |
Selling, general and administrative |
|
|
2.7 |
|
|
1.3 |
Operational cost accruals |
|
|
5.7 |
|
|
9.8 |
Taxes payable |
|
|
3.2 |
|
|
2.6 |
Interest payable |
|
|
1.8 |
|
|
— |
Accrued liabilities |
|
$ |
25.2 |
|
$ |
23.2 |
10. Debt
Below is an overview of our outstanding debt.
|
|
June 30, |
|
December 31, |
||
|
|
2025 |
|
2024 |
||
Term loan |
|
$ |
325.0 |
|
$ |
325.0 |
Stateline term loan |
|
|
72.0 |
|
|
— |
Less: unamortized debt financing costs |
|
|
(10.8) |
|
|
(9.3) |
Total debt, net of debt financing costs |
|
|
386.2 |
|
|
315.7 |
Less: current portion of long-term debt |
|
|
(16.7) |
|
|
(8.1) |
Long-term debt |
|
$ |
369.5 |
|
$ |
307.6 |
Stateline Term Loan
On May 23, 2025, Stateline entered into a Loan and Security Agreement (the “Stateline Term Loan”) with Stonebriar Commercial Finance LLC (“Stonebriar”), as lender, administrative agent, and collateral agent. The Company, through its subsidiary Solaris LLC, is the primary beneficiary of Stateline and therefore consolidates Stateline, including the Stateline Term Loan, in its condensed consolidated financial statements. Refer to Note 2. “Variable Interest Entities,” for additional information on the consolidation of Stateline.
The Stateline Term Loan provides for delayed draw term loan facility with a maximum principal amount equal to the lesser of (i) $550.0 million and (ii) 80% of the total cost of the Equipment Collateral (as defined in the Stateline Term Loan).
Advances under the facility are permitted through March 31, 2027. As of June 30, 2025, an initial advance of $72.0 million had been drawn. Advances are initially evidenced by “interim notes,” which are subsequently converted into “converted notes” pursuant to the terms of the agreement.
Interest on interim notes accrues from the date of each advance at a variable rate (the “Floating Rate”) equal to 5.94% plus the greater of (a) the applicable Secured Overnight Financing Rate (“SOFR”) or (b) 4.31%. The Floating Rate resets monthly on the first day of each calendar month. Interest is payable monthly in arrears on the first day of each calendar month.
Each advance converts to a “converted advance” on its conversion date (the “Conversion Date”), defined as the earliest of:
(a)The first day of the calendar quarter following the 90-day anniversary of “Go-Live” data (as defined in the Rental Agreement) of the applicable Equipment Collateral, (c)A mutually agreed-upon date by Stateline and Stonebriar.
(b)April 1, 2027, or
19
Upon conversion, the related interim note becomes a converted note bearing interest at a fixed rate of 9.85% per annum, subject to a one-time adjustment based on then-prevailing U.S. Treasury rates and SOFR rates as of the business day prior to the Conversion Date. Once established, the fixed rate remains in effect for the 72-month term of the converted note. Interest on converted notes is payable monthly in arrears on the first day of each month beginning the month following the Conversion Date.
Principal repayment begins on the first day of each month beginning the month following the Conversion Date, with 80% of the principal due in equal monthly installments over 72 months and the remaining 20% due at maturity. Prepayments are permitted with at least 10 days’ prior notice and, if made before March 31, 2028, are subject to a make-whole provision. Thereafter, prepayments are subject to a prepayment fee. Partial prepayments require lender consent.
The Stateline Term Loan includes customary affirmative and negative covenants, including restrictions on additional indebtedness, liens, asset sales, and distributions. Beginning in the fiscal quarter ending March 31, 2027 (except as noted below), Stateline must comply quarterly with the following financial covenants (as defined in the Stateline Term Loan), :
•Fixed charge coverage ratio of not less than 1.35 to 1.00
•Leverage ratio of not more than 3.50 to 1.00, and
•Minimum liquidity of not less than $5.0 million through December 31, 2026, and not less than $10.0 million thereafter.
The Stateline Term Loan is secured by the Equipment Collateral, related supply and power contracts, and proceeds thereof. The loan is non-recourse to the Company and secured solely by the assets of Stateline.
In connection with the Stateline Term Loan, Stateline incurred debt financing costs totaling $5.8 million, of which $0.8 million is allocated to the initial advances and recorded as a direct deduction from the carrying amount of the related debt and amortized as interest expense over the term of the loan using the effective interest method. The remaining $5.0 million is recorded as other non-current assets to be allocated proportionally upon additional advances.
Interest expense recognized in connection with the Stateline Term Loan was $0.5 million for the three and six months ended June 30, 2025. As of June 30, 2025, $0.5 million of the outstanding principal is classified as current debt in our condensed consolidated balance sheet.
The carrying amount of the Stateline Term Loan approximates its fair value as of June 30, 2025, due to its recent origination and variable interest rate that reflects current market conditions (Level 2 fair value measurement under ASC 820, Fair Value Measurement).
The table below includes the expected future principal maturities of the Stateline Term Loan as of June 30, 2025, based solely on the outstanding principal balance of $72.0 million and assumed conversion dates in 2026 and 2027 (actual maturities may vary based on timing of conversions and any prepayments). These estimates assume conversion in 2026 and early part of 2027 for the current advances, with principal repayments commencing thereafter over a 72-month term per converted note (80% amortized in equal monthly installments and 20% as a balloon payment at maturity). Future draws under the facility (up to an additional $446.5 million based on the estimated total commitment utilization) are not reflected in the table below, as they represent contingent future borrowings. The maturities of these future borrowings would follow a similar structure upon draw and conversion.
20
Payments of Debt Obligations Due by Period
As of June 30, 2025, the schedule of the repayment requirements of long-term debt and convertible notes is as follows:
Year Ending December 31, |
|
Principal Repayments of Long-term Debt |
|
Principal Repayments of Convertible Notes |
||
2025 (remainder of) |
|
$ |
8.1 |
|
$ |
— |
2026 |
|
|
19.7 |
|
|
— |
2027 |
|
|
25.6 |
|
|
— |
2028 |
|
|
25.9 |
|
|
— |
2029 |
|
|
277.6 |
|
|
— |
Thereafter |
|
|
40.1 |
|
|
155.0 |
Total future principal debt payments |
|
$ |
397.0 |
|
$ |
155.0 |
11. Convertible Notes
On May 2, 2025, the Company issued $155.0 million aggregate principal amount of 4.75% Convertible Senior Notes due 2030 (the “Convertible Senior Notes”) in an underwritten public offering (the “Notes Offering”), including the full exercise of a $20.0 million over-allotment option. The Company received net proceeds of $150.3 million, after deducting underwriting discounts and commissions of $4.7 million. Additional third-party issuance costs totaled $1.2 million. The Company used the net proceeds to purchase from Solaris LLC, its consolidated operating subsidiary, a subordinated convertible note of Solaris LLC with substantially similar economic terms as the Convertible Senior Notes. Of the $155.0 million gross proceeds, $100.0 million was restricted for capital expenditures to support the growth of the Solaris Power Solutions segment, specifically for additional power generation equipment to support customer activity. As of June 30, 2025, the remaining restricted cash balance was $39.4 million.
The Convertible Senior Notes are senior, unsecured obligations and bear interest at a rate of 4.75% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2025. The Convertible Senior Notes mature on May 1, 2030, unless earlier repurchased, redeemed, or converted in accordance with their terms.
The Convertible Senior Notes are convertible into shares of the Company’s Class A common stock at an initial conversion rate of 37.8896 shares per $1,000 principal amount, equivalent to a conversion price of approximately $26.39 per share. The initial conversion rate would result in approximately 5,872,888 shares if all Convertible Senior Notes were converted at the initial rate. The conversion rate is subject to customary anti-dilution adjustments in certain events, including stock splits, stock dividends, distributions, and specified corporate transactions. Upon a Make-Whole Fundamental Change (as defined in the indenture governing the Convertible Senior Notes (the “Indenture”)), the conversion rate may be increased for a limited period based on the trading price of the Class A common stock. The maximum increase to the conversion rate in such an event is 13.2612 shares per $1,000 principal amount, which result in up to approximately 2,055,486 additional shares if all Convertible Senior Notes are converted during such period and fully settled in shares.
As of June 30, 2025, the conversion rate remained unchanged from the initial rate of 37.8896 shares per $1,000 principal amount.
Holders may convert their Convertible Senior Notes prior to maturity under the following circumstances:
| ● | During any calendar quarter beginning after June 30, 2025, if the last reported sale price of the Class A common stock exceeds 130% of the conversion price for at least 20 trading days during any 30 consecutive trading day period ending in the prior quarter; |
21
| ● | During the five business days following any 10 consecutive trading day period in which the trading price of the Convertible Senior Notes is less than 98% of the product of the Class A common stock price and the conversion rate; |
| ● | Upon the occurrence of certain specified corporate events, including specified distributions or a Fundamental Change (as defined in the Indenture); |
| ● | At any time from February 1, 2030 through the second scheduled trading day immediately preceding the maturity date; or |
| ● | At any time prior to the second business day before a redemption date, if the Convertible Senior Notes are called for redemption. |
The Company may not redeem the Convertible Senior Notes prior to May 1, 2028. On or after that date, the Company may redeem all or a portion of the Convertible Senior Notes for cash at par plus accrued and unpaid interest, provided that:
| ● | The last reported sale price of the Class A common stock exceeds 130% of the conversion price on each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the trading day immediately before the redemption notice date; and |
| ● | The stock price condition is also satisfied on the trading day immediately preceding such notice date. |
The redemption date must fall on or before the 25th scheduled trading day immediately preceding the maturity date. Partial redemptions are not permitted unless at least $100.0 million aggregate principal amount of Convertible Senior Notes remains outstanding following such redemption. A redemption will also constitute a Make-Whole Fundamental Change, which may trigger an increase to the conversion rate. Holders may convert their Convertible Senior Notes until the second business day before the redemption date. Upon conversion, the Company may elect to settle the Convertible Senior Notes in cash, shares of Class A common stock, or a combination of both, subject to the terms of the Indenture.
The Company evaluated the Convertible Senior Notes under ASC 470-20, Debt with Conversion and Other Options, and determined that they should be accounted for as a single liability instrument. Accordingly, the notes are presented as convertible notes in the condensed consolidated balance sheet.
The total transaction costs, consisting of underwriting discounts and commissions and third party issue costs, were $5.9 million. These costs are presented as a direct deduction from the carrying amount of the convertible notes and are being amortized to interest expense over the term of the notes using the effective interest method. The effective interest rate is 5.6%. During the three months ended June 30, 2025, the Company recognized $1.4 million in interest expense related to the convertible notes, consisting of contractual interest expense and amortization of transaction costs.
As of June 30, 2025, the components of the convertible notes were as follows:
|
|
June 30, |
|
|
|
2025 |
|
Principal (par value) |
|
$ |
155.0 |
Unamortized debt discount and costs |
|
|
(5.7) |
Net carrying amount |
|
$ |
149.3 |
The estimated fair value (Level 1) of the convertible notes was $207.9 million as of June 30, 2025.
There are no required principal repayments on the convertible notes prior to maturity. As of June 30, 2025, the full $155.0 million principal balance contractually matures in 2030.
22
12. Fair Value Measurements and Financial Instruments
The Company’s financial assets and liabilities, as well as certain nonrecurring fair value measurements such as goodwill impairment and long-lived assets impairment, are to be measured using inputs from the three levels of the fair value hierarchy, of which the first two are considered observable and the last unobservable, which are as follows:
| ● | Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date; |
| ● | Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or other inputs corroborated by observable market data for substantially the full term of the assets or liabilities; and |
| ● | Level 3—Unobservable inputs that reflect the Company’s assumptions that market participants would use in pricing assets or liabilities based on the best information available. |
The carrying amount of the Company’s financial instruments, consisting of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities and other current liabilities, including insurance premium financing, as reflected in our condensed consolidated balance sheets, approximates fair value due to their short-term nature.
Additionally, the carrying amounts outstanding under our debt agreements with variable rates, as reflected in our condensed consolidated balance sheets, approximate fair value as the effective interest rate approximates market rates. The carrying value of amounts outstanding under our finance and operating lease obligations, as reflected in our condensed consolidated balance sheets, approximates fair value as the borrowing rate approximate market rates. The estimated fair values of these financial instruments are determined using Level 2 inputs within the fair value hierarchy. The convertible notes are publicly traded and their fair value is based on Level 1 inputs.
Credit Risk
The financial instruments that are subject to concentrations of credit risk mainly include cash and cash equivalents, restricted cash, and trade receivables.
As of June 30, 2025 and December 31, 2024, the balances of our cash and cash equivalents and restricted cash held with financial institutions total $139.0 million and $159.9 million, respectively, which are above the insured limits set by the FDIC. We consistently monitor the financial health of these institutions.
The majority of our accounts receivable have payment terms of 60 days or less. As of June 30, 2025, two customers accounted for 43% and 16% of our total accounts receivable. The concentration of customers operating within the oil and natural gas industry may increase our overall exposure to credit risk, as these customers may be similarly affected by shifts in economic, regulatory or other external factors. If a customer defaults, our gross profit and cash flows may be adversely affected. To manage this credit risk, we conduct credit evaluations, monitor customer payment behavior, and, when necessary, pursue legal remedies, such as filing of liens.
13. Equity and Non-controlling Interest
Dividends
In order to allow the Company to pay quarterly cash dividends to holders of its shares of Class A common stock, Solaris LLC paid dividend distributions totaling $8.1 million and $5.3 million to all Solaris LLC unitholders in the three months ended June 30, 2025 and 2024, respectively. Of these amounts, $4.9 million and $3.6 million were paid to the Company in the three months ended June 30, 2025 and 2024, respectively, all of which was used by it to pay quarterly cash dividends to holders of its shares of Class A common stock. Solaris LLC paid dividend distributions totaling $16.3 million and $10.6 million to all Solaris LLC unitholders in the six months ended June 30, 2025 and 2024, respectively.
23
Of these amounts, $9.6 million and $7.3 million were paid to the Company in the six months ended June 30, 2025 and 2024, respectively. Additional pro-rata distributions to certain Solaris LLC unitholders amounting to $1.2 million were made in the six months ended June 30, 2025 pursuant to the Company’s Tax Receivable Agreement (as defined below). See Note 15. “Income Taxes” for further details on the Tax Receivable Agreement.
Non-controlling Interest
Non-controlling interests in the condensed consolidated balance sheets represent the equity attributable to third-party owners in certain consolidated subsidiaries of the Company. As of June 30, 2025 and December 31, 2024, non-controlling interest consisted of the following:
|
|
June 30, |
|
December 31, |
||
|
|
2025 |
|
2024 |
||
Entity: |
|
|
|
|
|
|
Solaris LLC |
|
$ |
295.0 |
|
$ |
311.1 |
Stateline |
|
|
86.2 |
|
|
— |
Total |
|
$ |
381.2 |
|
$ |
311.1 |
Exchange of Solaris LLC Units
In the six months ended June 30, 2025, a total of 2,127,606 Solaris LLC units were exchanged for an equal number of shares of Class A common stock, and a corresponding number of shares of Class B common stock were cancelled resulting in an increase in the Company’s ownership interest in Solaris LLC.
14. Earnings Per Share
Basic earnings per share of Class A common stock is computed by dividing net income attributable to Class A shareholders by the weighted-average number of shares of Class A common stock outstanding during the same period. Diluted earnings per share is computed giving effect to all potentially dilutive shares.
The following table sets forth the calculation of earnings per share, or EPS, for the three and six months ended June 30, 2025 and 2024:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator (in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Solaris Energy Infrastructure, Inc. |
|
$ |
12.0 |
|
$ |
6.2 |
|
$ |
17.3 |
|
$ |
10.5 |
Less: income attributable to participating securities (1) |
|
|
(0.6) |
|
|
(0.4) |
|
|
(0.8) |
|
|
(0.7) |
Net income attributable to Class A shareholders |
|
$ |
11.4 |
|
$ |
5.8 |
|
$ |
16.5 |
|
$ |
9.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares of Class A common stock outstanding |
|
|
37,818,102 |
|
|
28,335,491 |
|
|
37,001,762 |
|
|
28,461,172 |
Diluted weighted-average shares of Class A common stock outstanding |
|
|
37,818,102 |
|
|
28,335,491 |
|
|
37,001,762 |
|
|
28,461,172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share of Class A common stock - basic |
|
$ |
0.30 |
|
$ |
0.20 |
|
$ |
0.44 |
|
$ |
0.35 |
Earnings per share of Class A common stock - diluted |
|
$ |
0.30 |
|
$ |
0.20 |
|
$ |
0.44 |
|
$ |
0.35 |
| (1) | The Company’s unvested restricted stock awards are participating securities because they entitle the holders to non-forfeitable rights to dividends until the awards vest or are forfeited. |
24
The following number of weighted-average potentially dilutive shares were excluded from the calculation of diluted earnings per share because the effect of including such potentially dilutive shares would have been antidilutive upon conversion:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Class B common stock |
|
|
27,873,211 |
|
|
13,671,971 |
|
|
28,486,572 |
|
|
13,671,971 |
Convertible notes |
|
|
3,807,697 |
|
|
— |
|
|
1,914,367 |
|
|
— |
Restricted stock awards |
|
|
1,857,801 |
|
|
2,010,964 |
|
|
1,917,680 |
|
|
1,833,239 |
Performance-based restricted stock units |
|
|
644,532 |
|
|
300,142 |
|
|
642,511 |
|
|
210,149 |
Stock options |
|
|
4,922 |
|
|
6,605 |
|
|
4,977 |
|
|
6,605 |
Total |
|
|
34,188,163 |
|
|
15,989,682 |
|
|
32,966,107 |
|
|
15,721,964 |
15. Income Taxes
Income Taxes
The Company is a corporation and, as a result, is subject to United States federal, state and local income taxes. Solaris LLC is treated as a partnership for United States federal income tax purposes and therefore does not pay United States federal income tax on its taxable income. Instead, the Solaris LLC unitholders, including the Company, are liable for United States federal income tax on their respective shares of Solaris LLC’s taxable income reported on the unitholders’ United States federal income tax returns. Solaris LLC is liable for income taxes in those states not recognizing its status as a partnership for United States federal income tax purposes.
For the three months ended June 30, 2025 and 2024, we recognized a combined United States federal and state expense for income taxes of $6.0 million and $1.3 million, respectively. For the six months ended June 30, 2025 and 2024, we recognized a combined United States federal and state expense for income taxes of $9.9 million and $3.2 million, respectively. The effective combined United States federal and state income tax rates were 19.8% and 12.0% for the three months ended June 30, 2025 and 2024, respectively. The effective combined United States federal and state income tax rates were 21.0% and 15.8% for the six months ended June 30, 2025 and 2024, respectively. For the three and six months ended June 30, 2025 and 2024, our 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 Company’s deferred tax position reflects the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting. The largest components of the Company’s deferred tax position relate to the Company’s investment in Solaris LLC and net operating loss carryovers. The Company recorded a deferred tax asset and additional paid-in capital for the difference between the book value and the tax basis of the Company’s investment in Solaris LLC. This difference originates from the equity offerings of Class A common stock, exchanges of Solaris LLC units (together with a corresponding number of shares of Class B common stock) for shares of Class A common stock, and issuances of Class A common stock, and corresponding Solaris LLC units, in connection with stock-based compensation.
Based on our cumulative earnings history and forecasted future sources of taxable income, we believe that we will be able to realize our deferred tax assets in the future. As the Company reassesses this position in the future, changes in cumulative earnings history, excluding non-recurring charges, or changes to forecasted taxable income may alter this expectation and may result in an increase in the valuation allowance and an increase in the effective tax rate.
Section 382 of the Internal Revenue Code of 1986 (the “Code”), contains rules that limit the ability of a company that undergoes an “ownership change” to utilize its net operating loss and tax credit carryovers and certain built-in losses recognized in years after the “ownership change.” An “ownership change” is generally defined as any change in ownership of more than 50% of a corporation’s stock over a rolling three-year period by stockholders that own (directly or indirectly) 5% or more of the stock of a corporation, or arising from a new issuance of stock by a corporation. If an ownership change occurs, Section 382 of the Code generally imposes an annual limitation on the use of pre-ownership change net operating loss carryovers to offset taxable income earned after the ownership change.
25
We do not believe the Section 382 annual limitation related to historical ownership changes impacts our ability to utilize our net operating losses; however, if we were to experience a future ownership change our ability to use net operating losses may be impacted.
Payables Related to the Tax Receivable Agreement
On May 17, 2017, in connection with its initial public offering (“IPO”), the Company entered into a Tax Receivable Agreement (the “Tax Receivable Agreement”) with the other then-existing members of Solaris LLC. The Tax Receivable Agreement was later amended on June 27, 2023. As of June 30, 2025, our liability under the Tax Receivable Agreement was $73.7 million, all of which was non-current, representing 85% of the net cash savings in United States federal, state and local income tax or franchise tax that the Company anticipates realizing in future years from certain increases in tax basis and certain tax benefits attributable to imputed interest as a result of the Company’s acquisition (or deemed acquisition for United States federal income tax purposes) of Solaris LLC units in connection with our IPO or pursuant to previous exercises of the Redemption Right or the Call Right (each as defined in the Solaris LLC Agreement) and additional tax basis arising from any payments the Company makes under the Tax Receivable Agreement.
The projection of future taxable income involves significant judgment. Actual taxable income may differ from our estimates, which could significantly impact our liability under the Tax Receivable Agreement. Therefore, in accordance with ASC 450, Contingencies, we have recorded a liability under the Tax Receivable Agreement related to the tax savings we may realize from certain increases in tax basis and certain tax benefits attributable to imputed interest as a result of the Company’s acquisition (or deemed acquisition for United States federal income tax purposes) of Solaris LLC units in connection with the IPO or pursuant to previous exercises of the Redemption Right or the Call Right (each as defined in Solaris LLC’s limited liability company agreement) and additional tax basis arising from any payments the Company makes under the Tax Receivable Agreement. Solaris LLC may make cash distributions to the Company in order for the Company to satisfy its obligations under the Tax Receivable Agreement and will be required to distribute cash pro rata to each of the other members of Solaris LLC, in accordance with the number of Solaris LLC units owned by each member at that time.
On January 9, 2025, the Company made payments totaling $3.6 million under the Tax Receivable Agreement. Solaris LLC made a cash distribution to the Company of $3.6 million to satisfy these obligations and concurrently made a cash distribution on a pro rata basis to certain Solaris LLC unitholders amounting to $1.2 million.
16. Concentrations
For the three months ended June 30, 2025, two customers accounted for 45% and 12% of the Company’s revenues. For the three months ended June 30, 2024, three customers accounted for 18%, 13% and 12% of the Company’s revenues. For the six months ended June 30, 2025, two customers accounted for 41% and 13% of the Company’s revenues. For the six months ended June 30, 2024, three customers accounted for 14%, 13% and 11% of the Company’s revenues. As of June 30, 2025, two customers accounted for 43% and 16% of the Company’s accounts receivable. As of December 31, 2024, two customers accounted for 33% and 18% of the Company’s accounts receivable.
For the three months ended June 30, 2025, one supplier accounted for 42% of the Company’s total purchases. For the three months ended June 30, 2024, one supplier accounted for 18% of the Company’s total purchases. For the six months ended June 30, 2025, one supplier accounted for 52% of the Company’s total purchases. For the six months ended June 30, 2024, one supplier accounted for 14% of the Company’s total purchases. As of June 30, 2025, two suppliers accounted for 51% and 20% of the Company’s accounts payable. As of December 31, 2024, one supplier accounted for 39% of the Company’s accounts payable.
17. Commitments and Contingencies
Litigation and Claims
In the normal course of business, the Company is subjected to various claims, legal actions, contract negotiations and disputes. The Company provides for losses, if any, in the year in which they can be reasonably estimated. In management’s opinion, there are currently no such matters outstanding that would have a material effect on the accompanying condensed consolidated financial statements other than the following.
26
On February 28, 2024, the Company was served with a lawsuit by Masaba Inc. in the Wyoming District Court related to alleged intellectual property infringement (the “Lawsuit”). The complaint was later amended to name the Company’s subsidiaries Solaris Oilfield Site Services Operating, LLC (“SOSSO”) and Solaris Oilfield Site Services Personnel, LLC (“SOSSP”) as defendants. The complaint seeks, among other relief, unspecified compensatory damages, rescission, pre-judgment and post-judgment interest, costs and expenses. On July 19, 2024, SOSSO and SOSSP petitioned the Patent Trial and Appeal Board of the United States Patent and Trademark Office (“USPTO”) to institute inter partes review (“IPR”) of all claims of the patent asserted in the Lawsuit (U.S. Patent No. 11,780,689 (“the ‘689 Patent”)). Pursuant to the parties’ joint request, the district court case was stayed on August 7, 2024 pending the completion of the requested IPR. On January 27, 2025, the USPTO instituted the IPR on all claims of the ‘689 Patent. A final written decision is expected in the IPR in January 2026. The Company believes that the claims asserted in the Lawsuit are without merit and will vigorously defend against them. At this time, we are unable to predict the ultimate outcome of this case or estimate the range of possible loss, if any.
On March 28, 2025, a purported stockholder of the Company filed a complaint in a putative class action lawsuit styled Stephen Pirello v. Solaris Energy Infrastructure, Inc., et al., Case No. 4:25-cv-01455, in the United States District Court for the Southern District of Texas. The complaint asserts claims against the Company and certain of its officers under Sections 10(b) and 20(a) of the Exchange Act, alleging among other things that they made misleading statements and omissions relating to the MER Acquisition. The complaint further alleges that these allegedly misleading statements and omissions were revealed in the Morpheus Research report regarding the Company issued on March 17, 2025, which the complaint alleges caused a decline in the Company’s stock price. The outcome of the lawsuit is uncertain, particularly because it is at its initial stages. However, the Company believes the lawsuit is without merit and intends to vigorously defend against it.
Purchase Commitments
In the normal course of business, the Company enters into purchase commitments for products and services, primarily related to its power equipment, service equipment and parts for manufacturing equipment. As of June 30, 2025, the Company has entered into material purchase commitments for power generation equipment driven by the growth of its Solaris Power Solutions segment. These commitments are cancellable but subject to significant termination penalties, ranging from 5% to 90% of the purchase price, depending on when the order is cancelled. As of June 30, 2025, the Company had the following purchase commitments, consisting of purchases of power generation equipment:
|
|
June 30, |
|
|
|
2025 |
|
|
|
|
|
Short-term purchase commitments (due within the next 12 months) |
|
$ |
222.4 |
Long-term purchase commitments (remaining term extending beyond 12 months) |
|
|
|
2025 expected payments |
|
|
138.1 |
2026 expected payments |
|
|
382.7 |
Long-term purchase commitments |
|
$ |
520.8 |
Total purchase commitments |
|
$ |
743.2 |
Purchase commitments include $450.4 million related to Stateline, which are expected to be funded using a combination of proceeds from the Stateline Term Loan and Stateline’s cash flows, with no recourse to the Company.
Other Commitments
The Company has executed a guarantee of lease agreement with Solaris Energy Management, LLC, a related party of the Company, related to the rental of office space. The total future guarantee under the guarantee of lease agreement with Solaris Energy Management, LLC is $2.0 million as of June 30, 2025. Refer to Note 18. “Related Party Transactions” below for additional information regarding related party transactions recognized.
27
18. Related Party Transactions
The Company incurs costs for services provided by Solaris Energy Management, LLC, a company owned by William A. Zartler, the Chief Executive Officer and Chairman of the Board. These costs include rent paid for office space, travel services and other administrative costs, included in selling, general and administrative costs and other operating expense in the condensed consolidated statement of operations. For the three months ended June 30, 2025 and 2024, Solaris LLC paid $0.2 million and $0.1 million, respectively, for these services. For the six months ended June 30, 2025 and 2024, Solaris LLC paid $0.4 million and $0.2 million, respectively, for these services. As of June 30, 2025 and December 31, 2024, the Company included $0.1 million in prepaid expenses and other current assets on the condensed consolidated balance sheets. As of June 30, 2025 and December 31, 2024, the Company included $0.0 million and $0.1 million, respectively, of accruals to related parties in accrued liabilities on the condensed consolidated balance sheet.
As of September 30, 2024, THRC Holdings, LP, an entity managed by THRC Management, LLC (collectively, “THRC”), owned shares representing 10.4% of the outstanding shares of the Company’s Class A common stock, which also represented 5.2% of total voting shares. THRC is affiliated with certain of the Company’s customers, including ProFrac Services, LLC, and certain of the Company’s suppliers including Automatize Logistics, LLC, IOT-EQ, LLC and Cisco Logistics, LLC (collectively, “THRC Affiliates”).
THRC is no longer considered a related party as of October 1, 2024. The revenues and cost of services disclosed herein reflect transactions that occurred while THRC was considered a related party.
For the three and six months ended June 30, 2024, the Company recognized service revenue of $4.2 million and $7.5 million, respectively, from services provided to THRC Affiliates.
As part of the MER Acquisition, the Company acquired a lease agreement for commercial real estate with KTR Management Company, LLC, which owns 30.1% of the outstanding shares of the Company’s Class B common stock, which also represents 12.0% of total voting shares as of June 30, 2025. As of June 30, 2025, the Company recognized an operating lease right-of-use asset of $0.2 million and a current operating lease liability of $0.2 million on the condensed consolidated balance sheets. As of December 31, 2024, the Company recognized an operating lease right-of-use asset of $0.3 million and an operating lease liability of $0.3 million, split between current and non-current portions, on the condensed consolidated balance sheets. For the three and six months ended June 30, 2025, the Company incurred $0.1 million and $0.1 million, respectively, of rental expense related to the commercial real estate lease, included in cost of services on the condensed consolidated statement of operations. During the three and six months ended June 30, 2025, the Company incurred $0.0 million and $0.3 million, respectively, of rental expense related to a short-term equipment rental and $0.0 million and $0.1 million, respectively, of fuel, utility and travel expenses from KTR Management Company, LLC, included in cost of leasing revenue on the condensed consolidated statement of operations. During the six months ended June 30, 2025, the Company also purchased certain equipment from KTR Management Company, LLC for $2.0 million, included as property, plant and equipment, net on the condensed consolidated balance sheets. The equipment purchased was not marked-up and represents the same amount the Company would have paid had the Company acquired the equipment directly.
In connection with the issuance of the Convertible Senior Notes, BlackRock Portfolio Management LLC (“BlackRock”), a holder of in excess of 5% of our total outstanding shares of common stock, purchased an aggregate principal amount of $55.0 million at the price to the public. The Company’s audit committee approved BlackRock’s participation in the Notes Offering on April 30, 2025.
19. Subsequent Events
Dividends
On July 23, 2025, the Company’s board of directors approved a quarterly cash dividend of $0.12 per share of Class A common stock, payable on September 26, 2025, to holders of record as of September 16, 2025. Additionally, a distribution of $0.12 per unit will be made to Solaris LLC unitholders, with the same payment and record dates.
28
One Big Beautiful Bill Act
On July 4, 2025, Public Law No. 119-21, commonly referred to as the One Big Beautiful Bill Act (“the Act”), was signed into law by President Trump. While the Act will not have an impact on historical financial data, the Company’s future tax liabilities may be impacted.
Provisions of the Act that are expected to impact the Company include: (i) allowance to expense 100% of the costs of certain qualified property acquired after January 19, 2025; and (ii) modification on limitations on deduction of interest expense. The Company is currently evaluating the full impacts of the Act.
Exchange of Solaris LLC Units
On July 28, 2025, a total of 4,000,000 Solaris LLC Units were exchanged for an equal number of shares of Class A common stock, and a corresponding number of shares of Class B common stock were cancelled, resulting in an increase in the Company’s ownership interest in Solaris LLC.
29
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References to “we,” “us,” “our,” “Solaris” or the “Company” refer to Solaris Energy Infrastructure, Inc. (either individually or together with its subsidiaries, as the context requires). 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. The following discussion contains “forward-looking statements” that reflect our plans, estimates, beliefs and expected performance. 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” included elsewhere in this Quarterly Report and “Risk Factors” included in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2024, as updated by our subsequent filings with the SEC, all of which are difficult to predict. 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.
Executive Overview
We provide mobile and scalable equipment-based solutions for use in distributed power generation as well as the management of raw materials used in the completion of oil and natural gas wells. Headquartered in Houston, Texas, Solaris serves multiple U.S. end markets, including energy, data centers, and other commercial and industrial sectors.
We operate through two reportable business segments:
| ● | Solaris Power Solutions: This segment offers configurable all-electric natural gas-powered mobile turbines and ancillary equipment. We lease this equipment to data center, energy, and other commercial and industrial sector customers. |
| ● | Solaris Logistics Solutions: This segment designs and manufactures specialized equipment that, when combined with field technician support, last mile and mobilization logistics services, and our software solutions, enables us to deliver comprehensive offerings that enhance efficiencies for oil and natural gas operators and their suppliers. |
Recent Developments
Formation of Stateline
On April 28, 2025, we announced the formation of Stateline Power LLC (“Stateline”) with a customer. The entity was formed to provide off-grid power to such customer’s data center campus pursuant to a long-term equipment rental agreement. Additional information regarding Stateline is provided in Note 2. “Variable Interest Entities” in the notes to our condensed consolidated financial statements.
Issuance of Convertible Senior Notes
On May 2, 2025, we completed the issuance of $155.0 million aggregate principal amount of 4.75% Convertible Senior Notes due 2030, primarily to support the ongoing growth program of our Solaris Power Solutions segment. Further details regarding the terms and accounting treatment of these notes are included in Note 11. “Convertible Notes” in the notes to our condensed consolidated financial statements.
Stateline Debt Financing
On May 23, 2025, Stateline entered into a delayed draw term loan facility with Stonebriar Commercial Finance LLC, providing a maximum principal amount equal to the lesser of (i) $550 million and (ii) 80% of the total cost of equipment collateral, as defined in the term loan agreement. As of June 30, 2025, an initial advance of $72.0 million had been drawn. The facility will be used to finance capital expenditures of Stateline, with any remaining funding needs expected to be met through Stateline cash on hand. For further details, see Note 10. “Debt” in the notes to our condensed consolidated financial statements.
30
Market Trends and Outlook
In the second quarter, Solaris Power Solutions segment grew significantly, and its Adjusted EBITDA now contributes over 2/3 of total segment Adjusted EBITDA. Capital expenditures are also heavily weighted towards Solaris Power Solutions as we intend to grow our fleet and deploy more power assets with customers. We believe continued demand for our power assets will drive Solaris Power Solutions to continue to be the dominant segment in terms of Revenue and Adjusted EBITDA contribution.
Today, Solaris Power Solutions’ primary customers include a leading company in the artificial intelligence computing sector, as well as several energy companies requiring power for hydrocarbon production, processing, transportation, and refining applications.
Demand for Solaris Power Solutions is predominantly influenced by accelerating needs for power in the U.S., juxtaposed against constrained electrical grid infrastructure. This is due to a number of factors including, but not limited to, aging transmission and distribution networks, extreme weather, and long lead times for various electric infrastructure equipment. Solaris’ turbine offerings are configurable and can be scaled to match power demand on a “behind-the-meter” or “distributed” basis in a shorter timeline than many grid-based providers can service.
The Company estimates approximately 75% of the total 1,700 MW expected delivered capacity is currently committed to customers under commercial agreements that primarily range in tenor from two to seven years. Each of these commercial agreements include distinct product specifications, such as product type, quantity, delivery period, and price, as well as standard terms and conditions with respect to acceptance, delivery, transportation, inspection, assignment, taxes and performance failure. Approximately 67% of these contracts are for the data center end market, 8% is contracted to the energy end market and approximately 25% of the capacity is open and being discussed with multiple customers that represent a variety of end markets. We expect this contract exposure to drive a similar end-market exposure for revenue and earnings for this segment.
We expect total company capital expenditures remaining in 2025 of approximately $295 million on a consolidated basis, of which approximately $190 million should be incurred by Stateline. The majority of these capital expenditures are to support Solaris Power Solutions capital growth. Capital expenditures for Solaris Logistics Solutions represents approximately $10 million of our total expected annual capital expenditures.
We intend to fund the majority of our current planned capital expenditures with available cash, cash flows from operations, available capacity under our revolving credit facility, and proceeds from the Stateline debt financing facility. Additionally, while no assurance can be given, we may seek to issue additional securities through opportunistic capital market transactions, depending upon market conditions, and / or enter into additional debt financing agreements. Even if we are unable to secure the financing of our planned capital expenditures, we have the ability to cancel the committed purchase orders and incur cancellation fees.
The sustainability of this favorable supply-demand dynamic in the power sector will depend on multiple factors, including continued demand growth for generative AI computing applications, supply chain availability for electrical equipment, potential regulatory changes, overall economic activity levels, the level and pace at which the power industry can invest in power infrastructure, and the pace of continued electrification-driven demand growth.
For Solaris Logistics Solutions, demand is predominantly influenced by the level of oil and natural gas well drilling and completion activity in the U.S. During the second quarter of 2025, our fully utilized system count decreased 4% to 94 fully utilized systems from the first quarter of 2025, which was driven by lower crude oil prices. West Texas Intermediate (WTI) crude oil prices averaged $64 per barrel compared to an average of approximately $71 per barrel in the fourth quarter of 2024 and first quarter of 2025. We expect this commodity price softness could have some impact on activity levels for the remainder of the year. The level of demand over the longer term will depend on multiple factors, including commodity price levels, customer consolidation that can drive activity and procurement strategy changes and industry efficiency gains, geopolitical risk, economic activity, potential regulatory changes and potential impacts from geopolitical disruptions.
31
Results of Operations
Three and Six Months Ended June 30, 2025 Compared to Three and Six Months Ended June 30, 2024
Revenues
|
|
Three Months Ended |
|
|
|
|
Six Months Ended |
|
|
|
||||||||
|
|
June 30, |
|
|
|
|
June 30, |
|
|
|
||||||||
|
|
2025 |
|
2024 |
|
Change |
|
2025 |
|
2024 |
|
Change |
||||||
|
|
(in thousands) |
|
(in thousands) |
||||||||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Solaris Power Solutions |
|
$ |
75,625 |
|
$ |
— |
|
$ |
75,625 |
|
$ |
125,000 |
|
$ |
— |
|
$ |
125,000 |
Solaris Logistics Solutions |
|
|
73,703 |
|
|
73,886 |
|
|
(183) |
|
|
150,660 |
|
|
141,776 |
|
|
8,884 |
Total revenues |
|
$ |
149,328 |
|
$ |
73,886 |
|
$ |
75,442 |
|
$ |
275,660 |
|
$ |
141,776 |
|
$ |
133,884 |
Solaris Power Solutions. Revenues from Solaris Power Solutions increased by $75.6 million and $125.0 million in the three and six months ended June 30, 2025, respectively, compared to the same period of 2024. The Solaris Power Solutions segment was established in the third quarter of 2024 and did not contribute to revenue in the three and six months ended June 30, 2024, respectively.
Solaris Logistics Solutions. Revenues from Solaris Logistics Solutions remained relatively flat in the three months ended June 30, 2025, decreasing by $0.2 million to $73.7 million, compared to $73.9 million in the same period of 2024. This slight decrease was primarily due to a mix impact on average revenue per fully utilized system, partially offset by an increase in last mile tonnage in the three months ended June 30, 2025 compared to the same period of 2024.
Revenues from Solaris Logistics Solutions increased by $8.9 million, or 6%, to $150.7 million in the six months ended June 30, 2025, compared to $141.8 million in the same period of 2024. The increase was primarily driven by a $13.2 million increase in revenue from last mile and ancillary services, attributable to higher last mile tonnage year-over-year. This growth was partially offset by a $4.3 million decrease in revenue from fully utilized systems due to a mix impact on revenue on flat activity.
Cost of Revenue, exclusive of depreciation and amortization
|
|
Three Months Ended |
|
|
|
|
Six Months Ended |
|
|
|
||||||||
|
|
June 30, |
|
|
|
|
June 30, |
|
|
|
||||||||
|
|
2025 |
|
2024 |
|
Change |
|
2025 |
|
2024 |
|
Change |
||||||
|
|
(in thousands) |
|
(in thousands) |
||||||||||||||
Cost of revenue (exclusive of depreciation and amortization) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Solaris Power Solutions |
|
$ |
28,283 |
|
$ |
— |
|
$ |
28,283 |
|
$ |
44,777 |
|
$ |
— |
|
$ |
44,777 |
Solaris Logistics Solutions |
|
|
50,966 |
|
|
46,131 |
|
|
4,835 |
|
|
102,182 |
|
|
86,018 |
|
|
16,164 |
Total cost of revenue (exclusive of depreciation and amortization) |
|
$ |
79,249 |
|
$ |
46,131 |
|
$ |
33,118 |
|
$ |
146,959 |
|
$ |
86,018 |
|
$ |
60,941 |
Solaris Power Solutions. Cost of revenue for Solaris Power Solutions increased by $28.3 million and $44.8 million in the three and six months ended June 30, 2025, respectively, compared to the same period of 2024. The Solaris Power Solutions segment was established in the third quarter of 2024 and did not contribute to cost of revenue in the three and six months ended June 30, 2024.
Cost of revenue as a percentage of revenue for Solaris Power Solutions was 37% and 36% for the three and six months ended June 30, 2025, respectively.
Solaris Logistics Solutions. Cost of revenue for Solaris Logistics Solutions increased by $4.8 million, or 10%, to $51.0 million in the three months ended June 30, 2025, compared to $46.1 million in the same period of 2024. The increase was primarily driven by a $3.0 million increase in last mile and ancillary service costs, associated with higher last mile tonnage. In addition, a $1.8 million increase in system costs was due to the absence of the reversal of property taxes following a settlement with Brown County Appraisal District in the three months ended June 30, 2024, discussed below in “Gain on Reversal of Property Tax Contingency”.
32
Cost of revenue as a percentage of revenue for Solaris Logistics Solutions was 69% and 62% for the three months ended June 30, 2025 and 2024, respectively.
Cost of revenue for Solaris Logistics Solutions increased by $16.2 million, or 19%, to $102.2 million in the six months ended June 30, 2025, compared to $86.0 million in the same period of 2024. The increase was primarily driven by a $16.8 million increase in last mile and ancillary service costs, associated with higher last mile tonnage and a $1.8 million increase in systems costs due to the absence of the reversal of property taxes following a settlement with Brown County Appraisal District in the six months ended June 30, 2024, discussed below in “Gain on Reversal of Property Tax Contingency”. This increase was partially offset by a $2.4 million reduction in system costs, primarily due to lower repairs and maintenance in the six months ended June 30, 2025 compared to the same period of 2024.
Cost of revenue as a percentage of revenue for Solaris Logistics Solutions was 68% and 61% for the six months ended June 30, 2025 and 2024, respectively.
Depreciation and Amortization
Depreciation and amortization increased by $8.8 million, or 92%, to $18.4 million in the three months ended June 30, 2025, compared to $9.6 million in the same period of 2024. Depreciation and amortization increased by $18.9 million, or 97%, to $38.4 million in the six months ended June 30, 2025, compared to $19.5 million in the same period of 2024. This increase was primarily driven by $9.2 million and $20.0 million of depreciation expense associated with the Solaris Power Solutions segment in the three and six months ended June 30, 2025, respectively, which did not contribute to depreciation in the three and six months ended June 30, 2024.
Gain on Reversal of Property Tax Contingency
On June 14, 2024, we reached a settlement agreement with Brown County Appraisal District in Texas, following a favorable ruling by the Eastland Court of Appeals on April 18, 2024. As a result, in the three and six months ended June 30, 2024, we reversed $4.3 million of property tax expenses previously recorded through 2023 in connection with this case. Of this amount, $2.5 million was presented as gain on reversal of property tax contingency and $1.8 million reduced the costs of services in our condensed consolidated statements of operations.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $6.6 million, or 80%, to $14.9 million in the three months ended June 30, 2025, compared to $8.3 million in the same period of 2024. The increase was primarily driven by a $5.2 million increase in salaries, wages and benefits resulting from an increase in average headcount, along with higher professional fees and public company costs. Selling, general and administrative expenses increased by $13.9 million, or 86%, to $30.2 million in the six months ended June 30, 2025, compared to $16.2 million in the same period of 2024. The increase was primarily driven by a $8.4 million increase in salaries, wages and benefits resulting from an increase in average headcount, as well as a $3.1 million increase in stock-based compensation expense related to the cash settlement of employee stock awards.
Other Operating Expense, net
Other operating expense increased by $0.7 million to $1.2 million in the three months ended June 30, 2025, compared to $0.6 million in the same period of 2024. Other operating expense increased by $1.8 million to $2.5 million in the six months ended June 30, 2025, compared to $0.7 million in the same period of 2024. The increase was primarily due to higher transaction costs incurred during the three and six months ended June 30, 2025, compared to the same period of 2024.
33
Interest Expense, net
Interest expense increased by $4.8 million to $5.5 million in the three months ended June 30, 2025, compared to $0.7 million in the same period of 2024. Interest expense increased by $9.2 million to $10.7 million in the six months ended June 30, 2025, compared to $1.5 million in the same period of 2024. The increase was primarily due to higher borrowings outstanding along with higher effective interest rates in the three and six months ended June 30, 2025, compared to the same periods of 2024.
Provision for income taxes
During the three months ended June 30, 2025, we recognized a combined United States federal and state expense for income taxes of $6.0 million, an increase of $4.6 million as compared to the $1.3 million income tax expense we recognized during the same period in 2024. During the six months ended June 30, 2025, we recognized a combined United States federal and state expense for income taxes of $9.9 million, an increase of $6.7 million as compared to the $3.2 million income tax expense we recognized during the same period in 2024. This change was attributable to changes in operating gains and mix of states where we operate. The effective combined United States federal and state income tax rates were 19.8% and 12.0% for the three months ended June 30, 2025 and 2024, respectively. The effective combined United States federal and state income tax rates were 21.0% and 15.8% for the six months ended June 30, 2025 and 2024, respectively. The effective tax rate differed from the statutory rate primarily due to Solaris Energy Infrastructure, LLC’s (“Solaris LLC”) treatment as a partnership for United States federal income tax purposes.
Liquidity and Capital Resources
Overview
Our primary sources of liquidity consist of cash flows from operations, borrowing availability under our revolving credit facility, and proceeds from the recent issuance of Convertible Senior Notes and the initial advance under Stateline’s delayed draw term loan facility. Additionally, the delayed draw term loan facility provides substantial undrawn capacity, which is expected to support Stateline’s equipment purchase commitments.
We believe these sources will be sufficient to meet our short-term and long-term financial obligations, including purchase commitments and capital expenditures. While no assurance can be given, we may seek to issue additional securities through opportunistic capital markets transactions, depending upon market conditions, and / or enter into additional debt financing agreements.
Term Loan and Revolving Credit Facility
As of June 30, 2025, we had an outstanding principal balance of $325.0 million under our secured term loan agreement. Of this amount, $16.3 million is due within the next twelve months. The loan bears interest at a rate of 10.3% as of June 30, 2025 and is subject to periodic repricing. Assuming this rate remains constant, we estimate total interest payments of approximately $33.3 million over the next 12 months.
Our revolving credit facility provides for borrowings up to the lesser of $75.0 million or a borrowing base determined by a percentage of eligible accounts receivable and inventory, subject to customary reserves and adjustments. At our option, and provided certain conditions are met, the facility may be increased by up to an additional $50.0 million, and up to $10.0 million is available for the issuance of letters of credit. As of June 30, 2025, no borrowings were outstanding, and available capacity under the borrowing base was approximately $56.0 million. We intend to use any future borrowings for working capital and general corporate purposes.
Convertible Senior Notes
The Convertible Senior Notes issuance provided net proceeds of $150.3 million, which were primarily allocated to support the growth of our Solaris Power Solutions segment. Of this amount, $100.0 million was initially restricted for related capital expenditures. As of June 30, 2025, the remaining restricted cash balance was $39.4 million. This issuance enhanced our overall liquidity without requiring principal repayments prior to maturity. We estimate interest payments over the next 12 months will total approximately $7.4 million, payable semi-annually beginning November 1, 2025.
34
Further details regarding the terms and accounting treatment of these notes are included in Note 11. “Convertible Notes” in the notes to our condensed consolidated financial statements.
Stateline Debt Financing
As of June 30, 2025, Stateline had drawn an initial advance of $72.0 million under its delayed draw term loan facility out of the total estimated capacity of $518.5 million based on Stateline’s current capital plan. The remaining capacity of $446.5 million is expected to be drawn over the remainder of 2025 and fully by end of 2026, depending on the timing of progress payments and equipment deliveries. This facility provides significant funding flexibility for Stateline’s capital needs. We estimate total interest payments over the next 12 months of approximately $7.3 million, based on the principal drawn as of June 30, 2025. For further information on this facility, including its terms and repayment schedule, refer to Note 10. “Debt” in the notes to our condensed consolidated financial statements.
Capital Commitments
We have entered into purchase commitments for power generation equipment that are critical to our long-term strategic initiatives. Short-term purchase commitments due within 12 months total $222.4 million. Long-term purchase commitments that extend beyond one year total $520.8 million, of which $138.1 million is scheduled to be fulfilled during the remainder of 2025, and the remaining $382.7 million is due in 2026.
These commitments are cancellable but subject to significant termination penalties, ranging from 5% to 90% of the purchase price, depending on the timing of the cancellation.
Liquidity Position
As of June 30, 2025, cash and cash equivalents totaled $139.0 million. We believe that our cash reserves, projected operating cash flows, borrowing capacity under the revolving credit facility, and access to Stateline’s delayed draw term loan facility will provide adequate liquidity to meet our obligations for the next 12 months and beyond. These obligations include debt service, potential dividend payments, and equipment purchase commitments.
Share Repurchase Program
The Company’s board of directors authorized a share repurchase program on March 1, 2023, with an approved limit of $50.0 million and no set term limits. During the three months ended June 30, 2025, we did not repurchase nor retire any shares of Class A common stock under the share repurchase program. As of June 30, 2025, we have collectively repurchased and retired 4,272,127 shares of Class A common stock for $34.6 million, or $8.09 per share, resulting in $15.4 million remaining under the authorized share repurchase program.
All purchases made pursuant to the authorized share repurchase plan were made in accordance with applicable securities laws from time to time in the open-market or through private transactions, depending on market conditions. Going forward, future purchases may be made pursuant to a trading plan meeting the requirements of Rule 10b-18 or Rule 10b-5 under the Exchange Act, and may be discontinued at any time.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
|
|
Six Months Ended |
|
|
|
||||
|
|
June 30, |
|
|
|||||
|
|
2025 |
|
2024 |
|
Change |
|||
|
|
(in thousands) |
|||||||
Net cash provided by operating activities |
|
$ |
49,903 |
|
$ |
35,751 |
|
$ |
14,152 |
Net cash used in investing activities |
|
|
(336,999) |
|
|
(3,640) |
|
|
(333,359) |
Net cash provided by (used in) financing activities |
|
|
266,271 |
|
|
(32,885) |
|
|
299,156 |
Net change in cash |
|
$ |
(20,825) |
|
$ |
(774) |
|
$ |
(20,051) |
35
Significant Sources and Uses of Cash Flows
Operating Activities. Net cash provided by operating activities increased to $49.9 million for the six months ended June 30, 2025, compared to $35.8 million in the same period of 2024, representing an increase of $14.2 million. This increase was primarily driven by higher revenue, largely attributable to continued growth in business activity within our Solaris Power Solutions segment, which was established in the third quarter of 2024, and has rapidly expanded its contribution to our operating performance. Consequently, our net income, adjusted for non-cash items, increased by $53.4 million for the six months ended June 30, 2025, compared to the prior comparable period. This increase was partially offset by a $35.5 million increase in working capital use to support higher sales volumes and expanded operations and $3.7 million cash settlement related to stock-based compensation.
Investing Activities. Net cash used in investing activities was $337.0 million for the six months ended June 30, 2025, an increase from $3.6 million during the same period in 2024. The $333.4 million increase is mainly attributed to $325.6 million paid for turbines and ancillary equipment to support the growth and operations of Solaris Power Solutions.
Financing Activities. For the six months ended June 30, 2025, net cash provided by financing activities totaled $266.3 million. This amount primarily reflects $227.0 million borrowings from debt financing and $86.0 million capital contributions from non-controlling interest in Stateline, partially offset by $10.2 million paid for cancelled shares withheld for taxes from vesting of restricted stock, $9.6 million in quarterly dividends to Class A common stock shareholders, $7.9 million in distributions to Solaris LLC unitholders and $3.6 million in Tax Receivable Agreement payments. In comparison, net cash used in financing activities was $32.9 million for the six months ended June 30, 2024. This amount primarily reflects net debt repayments of $14.0 million, $8.1 million for share repurchases, $7.3 million in quarterly dividends to Class A common stock shareholders and $3.3 million in distributions to Solaris LLC unitholders.
Future Uses of Cash
Our significant cash commitments primarily relate to our debt financing agreements, which include both principal and interest payments on our legacy term loan and Stateline’s delayed draw term loan facility. In addition, we are obligated to make interest payments on our Convertible Senior Notes, with the principal amount due at maturity in 2030. At our election, the Convertible Senior Notes may be settled in cash, shares of our Class A common stock, or a combination of both.
Additional expected uses of cash include capital expenditures under our power generation fleet growth program, purchase commitments, obligations under our Tax Receivable Agreement, scheduled payments under finance and operating lease agreements, insurance premium financing agreements, dividend payments, and other routine operating obligations.
Off Balance Sheet Arrangements
Refer to Note 17. “Commitments and Contingencies – Purchase Commitments” included in the notes to our condensed consolidated financial statements contained herein for a discussion of our off-balance sheet arrangements.
Critical Accounting Policies and Estimates
For detailed information, please refer to Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no changes to our critical accounting policies since December 31, 2024.
Item 3.Quantitative and Qualitative Disclosures about Market Risk
Our exposures to market risk have not changed materially since December 31, 2024. For quantitative and qualitative disclosures about market risk, see Part II, Item 7A. “Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2024.
36
Item 4.Controls and Procedures
Disclosure Controls and Procedures
In accordance with Exchange Act Rules 13a-15 and 15d-15, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2025. Disclosure controls refer to controls and procedures designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated by our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, and summarized and reported within the time periods specified in the rules and forms of the SEC. Based on the evaluation of our disclosure controls and procedures as of June 30, 2025, our principal executive officer and principal financial officer have concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our system of internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
37
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Due to the nature of our business, we may become, from time to time, involved in routine litigation or subject to disputes or claims related to our business activities. In the opinion of our management, there are no pending litigation, disputes or claims against us which, if decided adversely, could have a material adverse effect on our financial condition, cash flows or results of operations other than the lawsuits by Masaba Inc. and Mr. Stephen Pirello as discussed in detail in Note 17. “Commitments and Contingencies – Litigation and Claims” included in the notes to our condensed consolidated financial statements contained herein.
Item 1A. Risk Factors
Factors that could materially adversely affect our business, financial condition, operating results or liquidity and the trading price of our Class A common stock are described under Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 5, 2025. As of the date of this filing, there have been no material updates to the risk factors previously disclosed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 except as described herein.
Tariffs and other trade measures could adversely affect our results of operations, financial position and cash flows.
The U.S. government has announced baseline tariffs of 10% on products from virtually all foreign countries and an additional individualized reciprocal tariff on the countries with which the United States has the largest trade deficits. Additionally, tariffs have been placed on the importation of certain materials. As a result of the administration's trade policies, tariffs have increased and may increase our material input costs. Any further trade restrictions, retaliatory trade measures and additional tariffs could result in higher input costs to our products, increased costs and delays in meeting our customers’ orders. It remains unclear to what extent, upon which countries, and upon which terms, tariffs may be levied. There remains much uncertainty regarding the full scope of tariffs, if they will be increased, decreased or eliminated altogether and, to the extent that such trade policies impact our supply chain, we may not be able to fully mitigate the impact of these increased costs or pass price increases on to our customers.
The imposition of further tariffs by the United States on a broader range of imports, or further retaliatory trade measures taken in response to additional tariffs or uncertainty regarding such potential impacts, could increase costs in our supply chain or reduce demand of our customers’ products, either of which could adversely affect our results of operations. Additionally, changes in trade policy may have negative impacts on the global economic environment (including causing or exacerbating any potential recession) which could have a negative impact on the demand for our power generation solutions as our customers delay or cancel projects in which our business may service.
The ultimate impact of these trade measures on our business operations and financial results is uncertain and may be affected by various factors, including whether and when such trade measures are implemented, the timing when such measures may become effective, the amount, scope, or nature of such trade measures, the direct or indirect impacts that trade measures may have on consumer or business sentiment and the broader economy and our ability to execute strategies to mitigate any negative impacts.
We are subject to a number of risks associated with Stateline.
On April 28, 2025, we announced the formation of Stateline, an entity involving our newly formed, wholly owned subsidiary Solaris Power Solutions and CTC, an affiliate of an industry leader in the evolving AI computer space. CTC subsequently assigned its interest in Stateline to MZX, an affiliate of CTC. Stateline is expected to account for approximately 900 MW (or approximately 53% of our Solaris Power Solutions’ generation assets), and as such, Stateline subjects our overall business to a number of risks, including:
38
| ● | the risk that the demand for off-grid power generation related to artificial intelligence (“AI”) does not grow in the manner in which we expect; |
| ● | the fact that we derive, and will continue to derive, a significant portion of our revenue from a relatively small number of customers, and as a result, this reliance on a few large customers may adversely affect our revenue and operating results; |
| ● | Stateline may need to seek additional debt and equity financing to support its working capital needs and there can be no assurance that such financing would be available to Stateline on favorable terms or at all; |
| ● | Stateline and the industry in which it operates is subject to complex, developing regulatory frameworks, which may increase the time and labor necessary to operate the project as the parties intend; |
| ● | we may experience difficulties in finding alternative lessors for our power generation equipment dedicated to Stateline in the event of an early termination of the related rental agreement; |
| ● | certain key members of the Company’s management will dedicate a significant amount of their time and attention to Stateline; and |
| ● | the management agreement to which our subsidiary is a party provides for the termination of its operatorship under certain circumstances and, if those circumstances were to occur, (i) our partner may have the right to purchase our equity interests in Stateline and (ii) the Company would lose its seats on the board of directors of Stateline. |
To the extent one or more of these risks materializes, our Solaris Power Solutions segment and, in turn, our consolidated business and results of operations could be adversely affected.
We may be subject to short selling strategies and are party to various proceedings and claims related thereto from time to time.
Short selling is the practice of selling securities that the seller does not own but rather has borrowed from a third party with the intention of buying identical securities back at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale. We are, and may in the future may be, the subject of unfavorable allegations made by short sellers. For example, earlier this year, Morpheus Research issued a report to short sellers that contained certain allegations against us that we believe to be misleading (as discussed further below). Any such allegations may be followed by periods of instability in the market price of our shares of common stock and negative publicity.
Any related inquiry or formal investigation from a governmental organization or other regulatory body, or resulting litigation from private claimants, could result in a material diversion of our management’s time and could have a material adverse effect on our business and results of operations. Such a situation could be costly and time-consuming and could distract our management from operating our business. For example, on March 28, 2025, a purported Solaris stockholder filed a complaint in a putative class action lawsuit styled Stephen Pirello v. Solaris Energy Infrastructure, Inc., et al., Case No. 4:25-cv-01455, in the United States District Court for the Southern District of Texas. The complaint asserts claims against Solaris and certain of its officers under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, alleging among other things that they made misleading statements and omissions relating to Solaris’s acquisition of Mobile Energy Rentals LLC. The complaint further alleges that these allegedly misleading statements and omissions were revealed in the Morpheus Research report regarding Solaris issued on March 17, 2025, which the complaint alleges caused a decline in Solaris’s stock price. The outcome of the lawsuit is uncertain, particularly because it is at its initial stages. However, the Company believes the lawsuit is without merit and intends to vigorously defend against it.
We may be unable to raise the funds necessary to repurchase the Convertible Senior Notes for cash following a fundamental change or to pay any cash amounts due upon maturity or conversion of the Convertible Senior Notes, and our other indebtedness limits our ability to repurchase the Convertible Senior Notes or to pay any cash amounts due upon their maturity or conversion.
Noteholders may, subject to a limited exception, require us to repurchase their Convertible Senior Notes following a fundamental change at a cash repurchase price generally equal to the principal amount of the Convertible Senior Notes to be repurchased, plus accrued and unpaid interest, if any. Upon maturity of the Convertible Senior Notes, we must pay their principal amount and accrued and unpaid interest in cash, unless they have been previously repurchased, redeemed or converted.
39
In addition, upon conversion, we will satisfy part or all of our conversion obligation in cash unless we elect to settle conversions solely in shares of our Class A common stock. We may not have enough available cash or be able to obtain financing at the time we are required to repurchase the Convertible Senior Notes or pay any cash amounts due upon their maturity or conversion. In addition, applicable law, regulatory authorities and the agreements governing our other indebtedness may restrict our ability to repurchase the Convertible Senior Notes or pay any cash amounts due upon their maturity or conversion. For example, we expect to fund payments due on the Convertible Senior Notes from corresponding payments due to us under the subordinated intercompany convertible note to be issued by Solaris LLC to us. Each of our Term Loan Agreement and revolving credit facility will prohibit Solaris LLC from making payments to us under the subordinated intercompany convertible note except to provide for regularly scheduled interest payments, provided no events of default exists under the Term Loan Agreement or revolving credit facility, as applicable, or would result therefrom, and except for certain other payments in equity interests. Accordingly, we may not have access to funds from Solaris LLC to repurchase the Convertible Senior Notes for cash following a fundamental change or to pay any cash amounts due upon conversion of the Convertible Senior Notes. We may seek to obtain a waiver under the Term Loan Agreement and revolving credit facility to permit these payments, but we cannot assure you that we will be able to obtain such a waiver. Unless we exercise our option to settle conversions solely in shares, our failure to repurchase the Convertible Senior Notes or to pay the cash amounts due upon their maturity or conversion when required will constitute a default under the indenture governing the Convertible Senior Notes (the “Indenture”). A default under the Indenture or the fundamental change itself could also lead to a default under agreements governing our other indebtedness, which may result in that other indebtedness becoming immediately payable in full. We may not have sufficient funds to satisfy all amounts due under the other indebtedness and the Convertible Senior Notes.
The issuance of shares of our Class A common stock upon conversion of the Convertible Senior Notes will dilute the ownership interests of our stockholders and could depress the trading price of our Class A common stock.
Upon conversion of the Convertible Senior Notes offered in the Notes Offering, we will satisfy part or all of our conversion obligations in shares of our Class A common stock, unless we elect to settle conversions solely in cash. The issuance of shares of our Class A common stock upon conversion of the Convertible Senior Notes will dilute the ownership interests of our stockholders, which could depress the trading price of our Class A common stock. In addition, the market’s expectation that conversions may occur could depress the trading price of our Class A common stock even in the absence of actual conversions. Moreover, the expectation of conversions could encourage the short selling of our Class A common stock, which could place further downward pressure on the trading price of our Class A common stock.
Provisions in the indenture governing the Convertible Senior Notes could delay or prevent an otherwise beneficial takeover of us.
Certain provisions in the Convertible Senior Notes and the Indenture could make a third party attempt to acquire us more difficult or expensive. For example, if a takeover constitutes a “fundamental change” (as defined in the Indenture), then investors of the Convertible Senior Notes will have the right to require us to repurchase their Convertible Senior Notes for cash. In addition, if a takeover constitutes a “Make-Whole Fundamental Change” (as defined in the Indenture), then we may be required to temporarily increase the conversion rate for the Convertible Senior Notes. In either case, and in other cases, our obligations under the Convertible Senior Notes and the Indenture could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management, including in a transaction that holders of our Class A common stock may view as favorable.
The conditional conversion feature of the Convertible Senior Notes, if triggered, may adversely affect our financial condition and operating results.
In the event the conditional conversion feature of the Convertible Senior Notes is triggered, holders of such notes will be entitled to convert the Convertible Senior Notes at any time during specified periods at their option. If one or more holders elect to convert their Convertible Senior Notes, we may elect to settle all or a portion of our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their Convertible Senior Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Convertible Senior Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
40
The accounting method for the Convertible Senior Notes could adversely affect our reported financial condition and results.
The accounting method for reflecting the Convertible Senior Notes on our balance sheet, accruing interest expense for the Convertible Senior Notes and reflecting the underlying shares of our Class A common stock in our reported diluted earnings per share may adversely affect our reported earnings and financial condition.
In accordance with applicable accounting standards, we expect that the Convertible Senior Notes will be reflected as a liability on our balance sheets, with the initial carrying amount equal to the principal amount of the Convertible Senior Notes, net of issuance costs. The issuance costs will be treated as a debt discount for accounting purposes, which will be amortized into interest expense over the term of the Convertible Senior Notes. As a result of this amortization, the interest expense that we expect to recognize for the Convertible Senior Notes for accounting purposes will be greater than the cash interest payments we will pay on the Convertible Senior Notes, which will result in lower reported income.
In addition, we expect that the shares of Class A common stock underlying the Convertible Senior Notes will be reflected in our diluted earnings per share using the “if converted” method. Under that method, diluted earnings per share would generally be calculated assuming that all the Convertible Senior Notes were converted solely into shares of our Class A common stock at the beginning of the reporting period, unless the result would be anti-dilutive. The application of the if-converted method may reduce our reported diluted earnings per share, and accounting standards may change in the future in a manner that may adversely affect our diluted earnings per share.
Furthermore, if any of the conditions to the convertibility of the Convertible Senior Notes is satisfied, then we may be required under applicable accounting standards to reclassify the liability carrying value of the Convertible Senior Notes as a current, rather than a long-term, liability. This reclassification could be required even if no noteholders convert their Convertible Senior Notes and could materially reduce our reported working capital.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
As described in Note 11. “Convertible Notes” to our notes to our condensed consolidated financial statements contained herein, on May 2, 2025, we issued $155.0 million aggregate principal amount of 4.75% convertible senior notes due 2030. The Convertible Senior Notes were offered and sold in an offering registered under the Securities Act pursuant to the Company’s Registration Statement on Form S-3ASR (Reg. No. 333-286868), as supplemented by a preliminary prospectus supplement dated April 30, 2025, the pricing term sheet dated May 1, 2025, and a final prospectus supplement dated May 1, 2025.
Our shares of Class A common stock issuable upon conversion of the Convertible Senior Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. We do not intend to file a registration statement for the resale of the Convertible Senior Notes or any shares of Class A common stock issuable upon conversion of the Convertible Senior Notes. We anticipate any such future issuances will be made in accordance with Section 3(a)(9) under the Securities Act.
The initial conversion rate will be 37.8896 shares of Class A common stock per $1,000 principal amount of Convertible Senior Notes, which represents an initial conversion price of approximately $26.39 per share of Class A common stock. The conversion rate will be subject to customary anti-dilution adjustments, including pursuant to customary “make-whole” provisions. The maximum conversion rate will be 51.1508 shares of Class A common stock per $1,000 principal amount of Convertible Senior Notes, representing a minimal conversion price of approximately $19.55 per share, in each case subject to customary anti-dilution adjustments. The maximum number of shares of Class A common stock issuable upon conversion of the Convertible Senior Notes is 7,928,374, subject to customary anti-dilution adjustments.
41
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 three months ended June 30, 2025, 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) |
|
April 1 - April 30 |
|
1,693 |
|
|
$ |
18.40 |
|
|
— |
|
|
15,440,555 |
May 1 - May 31 |
|
— |
|
|
|
— |
|
|
— |
|
|
15,440,555 |
June 1 - June 30 |
|
1,947 |
|
|
|
27.77 |
|
|
— |
|
|
15,440,555 |
Total |
|
3,640 |
|
|
$ |
23.41 |
|
|
— |
|
|
|
| (1) | Consists of shares purchased to satisfy tax withholding obligations upon the vesting of restricted stock awarded to certain of our employees. |
| (2) | On March 1, 2023, the Company’s board of directors authorized a plan to repurchase up to $50 million of our Class A common stock. |
Item 3.Defaults upon Senior Securities
None.
Item 4.Mine Safety Disclosures
None.
Item 5.Other Information
(a) The information and disclosures which are set forth above under “Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds” are incorporated by reference into this “Part II, Item 5. Other Information” in their entirety, and shall serve as disclosure of such information pursuant to Item 3.02 of Form 8-K.
(b) During the three months ended June 30, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
42
43
Exhibit No. |
|
Description |
|---|---|---|
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10.3*#+ |
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|
|
10.4*#+ |
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|
|
10.5# |
|
|
|
|
|
31.1* |
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
31.2* |
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.1** |
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|
|
|
|
32.2** |
|
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|
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|
101.INS* |
|
Inline XBRL Instance Document. |
|
|
|
101.SCH* |
|
Inline XBRL Taxonomy Extension Schema Document. |
|
|
|
101.CAL* |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
|
|
|
101.DEF* |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document. |
|
|
|
101.LAB* |
|
Inline XBRL Taxonomy Extension Labels Linkbase Document. |
|
|
|
101.PRE* |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
|
|
|
104* |
|
Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101) |
* Filed herewith.
** Furnished herewith. Pursuant to SEC Release No. 33-8212, this certification will be treated as “accompanying” this Quarterly Report on Form 10-Q and not “filed” as part of such report for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of Section 18 of the Exchange Act, and this certification will not be deemed to be incorporated by reference into any filing under the Securities Act, except to the extent that the registrant specifically incorporates it by reference.
# Pursuant to Item 601(a)(5) of Regulation S-K, certain schedules and similar attachments have been omitted. The registrant hereby agrees to furnish a copy of any omitted schedule or similar attachment to the SEC upon request.
+ |
Item 601(b)(10)(iv) of Regulation S-K, certain portions of this exhibit have been redacted. The registrant hereby agrees to furnish supplementally an unredacted copy of the exhibit to the SEC upon request. |
44
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
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|
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|
|
SOLARIS ENERGY INFRASTRUCTURE, INC. |
|
|
|
|
July 31, 2025 |
By: |
/s/ William A. Zartler |
|
|
William A. Zartler |
|
|
Chairman and Chief Executive Officer |
|
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
|
|
|
|
|
|
July 31, 2025 |
By: |
/s/ Kyle S. Ramachandran |
|
|
Kyle S. Ramachandran |
|
|
President and Chief Financial Officer |
|
|
(Principal Financial Officer) |
45
Certain identified information in this Agreement denoted with “[***]” has been excluded from this exhibit pursuant to Item 601(b)(10)(iv) of Regulation S-K because it is both not material and of the type that the registrant treats as private and confidential.
Exhibit 10.3
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
STATELINE POWER, LLC
a Texas limited liability company
April 28, 2025
4912-9343-3620
THE LIMITED LIABILITY COMPANY INTERESTS EVIDENCED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. SUCH LIMITED LIABILITY COMPANY INTERESTS MAY NOT BE TRANSFERRED OR RESOLD, EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE AND OTHER SECURITIES LAWS, PURSUANT TO REGISTRATION THEREUNDER OR EXEMPTION THEREFROM. IN ADDITION, TRANSFER OF SUCH LIMITED LIABILITY COMPANY INTERESTS IS FURTHER RESTRICTED AS PROVIDED IN THIS AGREEMENT. PURCHASERS OF SUCH LIMITED LIABILITY COMPANY INTERESTS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
STATELINE POWER, LLC
a Texas limited liability company
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Page I
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Page II
ARTICLE 1249
EXHIBITS
Exhibit ADefined Terms
Exhibit BForm of Addendum Agreement
Exhibit CForm of Call Notice AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF STATELINE POWER, LLC a Texas limited liability company
Exhibit DManagement Agreement
Exhibit EInitial Budgets
SCHEDULES
Schedule IMembers’ Schedule
Schedule IIInitial Directors
Schedule IIIInitial Officers
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Page III
This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of Stateline Power, LLC, a Texas limited liability company (the “Company”), dated as of April 28, 2025 (the “Effective Date”), is adopted, executed and agreed to, for good and valuable consideration, by the Members and the Company.
WHEREAS, the Company was formed pursuant to the TBOC by filing the Certificate with the Secretary of State of the State of Texas on April 9, 2025;
WHEREAS, the Solaris Member entered into that certain Limited Liability Company Agreement of the Company dated April 9, 2025 (the “Original Agreement”);
WHEREAS, the Solaris Member has contributed or caused to be contributed to the Company the Solar Turbines Purchase Orders in exchange for the issuance by the Company of Series A-1 Units to the Solaris Member;
WHEREAS, the Members wish to enter into this Agreement to, among other things, (a) amend and restate the Original Agreement in its entirety in accordance with and pursuant to Section 13 of the Original Agreement, (b) set forth the management of the Company and (c) set forth their respective rights and obligations; and
WHEREAS, effective on the Effective Date (a) the Solaris Member shall continue as a Member and (b) the CTC Member will be admitted to the Company as a Member, in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, for and in consideration of the premises and mutual covenants and agreements contained herein and other good and valuable consideration (the receipt and sufficiency of which is hereby confirmed and acknowledged), the Company and the Members amend and restate the Original Agreement in its entirety to read as follows:
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Page 1
In this Agreement, unless a clear contrary intention appears: (a) pronouns in the masculine, feminine and neuter genders shall be construed to include each other gender, and words in the singular form shall be construed to include the plural and vice versa; (b) the term “including” shall be construed to be expansive rather than limiting in nature and to mean “including, without limitation”; (c) references to Articles and Sections refer to Articles and Sections of this Agreement; (d) the words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder” and words of similar import refer to this Agreement as a whole, including the Exhibits and Schedules attached to this Agreement, and not to any particular subdivision unless expressly so limited; (e) references in any Article, Section or definition to any clause mean such clause of such Article, Section or definition; (f) references to Exhibits and Schedules are to the items attached to this Agreement as the described Exhibits or Schedules to this Agreement, each of which is incorporated herein and made a part of this Agreement for all purposes as if set forth in full herein; (g) references to dollars or money refer to the lawful currency of the United States; (h) references to “federal” or “Federal” mean U.S. federal or U.S. Federal, respectively; (i) references to the “IRS” or the “Internal Revenue Service” refer to the United States Internal Revenue Service; (j) references to “Revenue Procedures” or “Revenue Rulings” refer to Revenue Procedures or Revenue Rulings, respectively, published by the Internal Revenue Service; (k) reference to any agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended, modified or supplemented (including by any waiver or consent) and in effect from time to time in accordance with the terms thereof; and (l) reference to any Law means such Law as amended, modified, codified, reenacted or replaced and in effect from time to time. The Table of Contents and the Article and Section titles and headings in this Agreement are inserted for convenience of reference only and are not intended to be a part of, or to affect the meaning or interpretation of, this Agreement.
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Page 2
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Page 3
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Page 4
A Member will cease to be a Member only in the manner described in Section 3.6 or Article 7.
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Each Director shall serve in such capacity until such Director’s successor has been elected and qualified or until such Director’s death, disability, retirement, resignation or removal. The Directors as of the Effective Date are set forth on Schedule II.
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The Operator shall not be liable to the Company or the Members for any action taken or not taken by any such Officer, except to the extent the Operator has not complied with the Management Agreement in accordance with the delegation of authority thereunder.
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The Partnership Representative shall cause the Company to deliver to each Member as soon as applicable after the end of each calendar year, but in any event no later than ninety (90) days after the end of each such year, an Internal Revenue Service Schedule K-1 together with such additional information as may be reasonably required by the Members (or their owners) in order to file their individual returns reflecting the Company’s operations. The Partnership Representative shall also cause the Company to deliver to the Members, an estimated Internal Revenue Service Schedule K-1 or any successor form within sixty (60) days after the end of each Fiscal Year, including any appropriate state and local apportionment information. The Company shall bear the costs of the preparation and filing of any Tax Returns and other information returns and forms of the Company, including the preparation of any estimates.
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DISSOLUTION, WINDING-UP AND TERMINATION
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[Signature Pages Follow]
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IN WITNESS WHEREOF, the Company and the Members have executed this Amended and Restated Limited Liability Company Agreement as of the date first set forth above.
COMPANY:
STATELINE POWER, LLC
By: /s/ Christopher M. Powell
Name: Christopher M. Powell
Title: Secretary
SOLARIS MEMBER:
SOLARIS POWER SOLUTIONS STATELINE, LLC
By: /s/ Kyle Ramachandran Name: Kyle Ramachandran Title: President and Chief Financial Officer By: /s/ Jared Birchall Name: Jared Birchall Title: Corp Secretary
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Signature Page
CTC MEMBER:
CTCPROPERTY LLC
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Signature Page
“Accredited Investor” has the meaning ascribed to such term in Rule 501(a) promulgated under the Securities Act.
“Addendum Agreement” is defined in Section 3.6(a).
“Additional Member” means any Person not already a Member in respect of particular Units who acquires all of the Units held by a Member from such Member and is admitted to the Company as a Member pursuant to the provisions of Section 3.6.
“Additional Units” means additional classes or series of Units (or securities convertible into or exercisable for Units), other than Series A Units.
“Adjusted Capital Account” means the Capital Account maintained for each Member: (a) increased by any amounts that such Member is obligated to restore or is treated as obligated to restore under Treasury Regulations Sections 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and 1.704-2(i)(5); and (b) decreased by any amounts described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6) with respect to such Member. The foregoing definition of “Adjusted Capital Account” is intended to comply with the provisions of Treasury Regulations Sections 1.704-1(b)(2)(ii)(d) and 1.704-2 and shall be interpreted consistently therewith.
“Affected Member” is defined in Section 5.6(b).
“Affiliate” means, when used with respect to a specified Person, any Person which directly or indirectly Controls, is Controlled by or is Under Common Control with such specified Person. Notwithstanding the foregoing, no member of the Company Group shall be considered an Affiliate of Solaris, CTC or their respective Controlled Affiliates.
“Agreement” means this Amended and Restated Limited Liability Company Agreement of Stateline Power, LLC, as amended, supplemented and restated from time to time in accordance with the terms hereof.
“Allocation Period” means the period: (a) commencing on the Effective Date or, for any Allocation Period other than the first Allocation Period, the day following the end of a prior Allocation Period; and (b) ending (i) on the last day of each Fiscal Year; (ii) subject to clause (iii) of this definition, on the day immediately preceding any day on which an event that results in an adjustment to the Book Value of the Company’s assets pursuant to clauses (b)(i), (b)(ii), (b)(iii) or (b)(v) of the definition of Book Value (with such adjustment also deemed to occur on the day immediately preceding such event); (iii) immediately after any day on which an adjustment to the Book Value of the Company’s assets occurs pursuant to (A) clause (b)(i) of the definition of Book Value (solely in connection with the acquisition of an additional interest in the Company by an existing Member in exchange for a non-pro rata Capital Contribution) or (B) clause (b)(iv) of the definition of Book Value; or (iv) on any other date determined by the Board.
“Approved Budget” is defined in Section 8.5(a).
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Exhibit A-1
“Bankruptcy” or “Bankrupt” means with respect to any Person, that: (a) such Person (i) makes a general assignment for the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii) becomes the subject of an order for relief or is declared insolvent in any federal or state bankruptcy or insolvency proceedings; (iv) files a petition or answer seeking for such Person a reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any Law; (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against such Person in a proceeding of the type described in subclauses (i) through (iv) of this clause (a); or (vi) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of such Person or of all or any substantial part of such Person’s properties; or (b) a proceeding seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any Law has been commenced against such person and 120 calendar days have expired without dismissal thereof or with respect to which, without such Person’s consent or acquiescence, a trustee, receiver or liquidator of such Person or of all or any substantial part of such Person’s properties has been appointed and 90 calendar days have expired without the appointment’s having been vacated or stayed, or 90 calendar days have expired after the date of expiration of a stay, if the appointment has not previously been vacated.
“Board” is defined in Section 8.1.
“Board Approval” is defined in Section 8.2(e).
“Book Value” means, with respect to any property of the Company, such property’s adjusted basis for U.S. federal income tax purposes, except as follows:
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Exhibit A-2
“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in Houston, Texas are authorized or required by Law to close.
“Call Notice” is defined in Section 5.2(a).
“Capex Budget” means the annual capital expenditure budget of the Company.
“Capital Account” is defined in Section 5.6(a).
“Capital Call” is defined in Section 5.2(a).
“Capital Contribution” means with respect to any Member, the amount of money and the initial Book Value of any property (other than money) contributed or deemed to be contributed to the Company by such Member. Any reference to the Capital Contributions of a Member will include the Capital Contributions made by a predecessor holder of such Member’s Units to the extent the Capital Contribution was made in respect of Units Transferred to such Member.
“Certificate” means the Certificate of Formation of the Company dated April 9, 2025, as amended from time to time in accordance with the terms hereof.
“Code” means the United States Internal Revenue Code of 1986, as amended from time to time. All references herein to sections of the Code shall include any corresponding provision or provisions of succeeding Law.
“Company” is defined in the preamble.
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Exhibit A-3
“Company Group” means the Company and its Subsidiaries and Controlled Affiliates.
“Company Level Taxes” means any U.S. federal, state, or local Taxes, additions to Tax, penalties, and interest payable by the Company or any Subsidiary thereof as a result of any examination of the Company’s or any Subsidiaries’ affairs by any U.S. federal, state, or local Tax authorities, including resulting administrative and judicial proceedings under the Partnership Tax Audit Rules.
“Confidential Information” means all proprietary or non-public information, trade secrets, process methods, designs, ideas, concepts, improvements, product developments, discoveries and inventions, whether patentable or not, including all such information relating to strategies, corporate opportunities, research, financial and sales data, evaluations or opinions, project locations, the identity of customers or acquisition targets (or contacts within their organizations) and all writings or materials of any type constituting or embodying any of such information, ideas, concepts, improvements, discoveries, inventions and other similar forms of expression that (a) relate to the Company Group’s businesses, products or services or (b) relate to or involve any of the Transaction Documents or the terms thereof or (c) are obtained by or on behalf of a Member from a member of the Company Group or their respective representatives, other than information which (i) was or becomes generally available to the public other than as a result of a breach of this Agreement by such Member, (ii) was or becomes available to such Member on a non-confidential basis before disclosure to the Member by a member of the Company Group or their respective representatives, (iii) was or becomes available to the Member from a source other than the Company, its Subsidiaries or their respective representatives (provided, however, such source is not known by such Member to be bound by a confidentiality agreement with a member of the Company Group or their respective representatives) or (iv) is independently developed by such Member without the use of any such information received under this Agreement.
“Conflict Activity” means (a) the waiver of any of the Company Group’s material rights, or the granting of any material consent or approval by the Company Group under the Management Agreement or the Rental Agreement, (b) the assertion by the Company Group of a material breach or material default by the Conflicted Member (or its Affiliates) under the Management Agreement or the Rental Agreement, or the enforcement of any rights of the Company Group under the Management Agreement or the Rental Agreement in connection with any such material breach or material default (or alleged material breach or material default) thereunder by the Conflicted Member (or its Affiliates); (c) the determination to cure any material breach of a member of the Company Group under the Management Agreement or the Rental Agreement; (d) the exercise of any discretionary audit or inspection rights by the Company Group provided in the Management Agreement or the Rental Agreement; or (e) the assertion, exercise or waiver of any and all rights of the Company pursuant to Section 1.02 of the Rental Agreement in its capacity as Lessor thereunder, including the taking of any action by the Company with respect to its right of first refusal or any of its rights in respect of any Rental Agreement RO Offer thereunder.
“Conflict Notice” is defined in Section 8.4(b).
“Conflicted Member” means a Member that is (or has an Affiliate, Representative or Representative of an Affiliate that is) a counterparty to the Company Group under the Management
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Exhibit A-4
Agreement or Rental Agreement, as applicable, which Member is entitled to certain rights or has certain obligations that have given rise to a Conflict Activity.
“Continuation Election” is defined in Section 12.1(a)(ii).
“Contribution Default” is defined in Section 5.4(a).
“Control,” including the correlative terms “Controlling,” “Controlled by” and “Under Common Control with” means possession, directly or indirectly (through one or more intermediaries), of the power to direct or cause the direction of management or policies (whether through ownership of Equity Interests, by contract or otherwise) of a Person.
“Covered Audit Adjustment” means an adjustment to any partnership-related item (within the meaning of Code Section 6241(2)(B)) to the extent such adjustment results in an “imputed underpayment” as described in Code Section 6225(b) or any analogous provision of state or local Law.
“Covered Person” means, (a) with respect to each Member: (i) such Member in its capacity as a Member (including in its capacity as the Partnership Representative, if applicable); (ii) each of such Member’s officers, directors, liquidators, partners, equityholders, managers and members in their capacity as such, (iii) each of such Member’s Affiliates (other than the Company and its Subsidiaries) and each of their respective officers, directors, liquidators, partners, equityholders, managers and members in their capacities as such; and (iv) any representatives, agents or employees of any Person identified in clauses (i)-(iv) of this clause (a) or any other Person who the Board expressly designates as a Covered Person in a written resolution; (b) each Director, in such Person’s capacity as a Director; and (c) each (x) current and former Officer (solely in such Person’s capacity as an Officer); and (y) each Person not identified in clause (x) who is or was an officer or employee or other service provider of any member of the Company Group and whom the Board expressly designates as a Covered Person in a written resolution.
“CPI” is defined in Section 8.5(c).
“Creditors’ Rights” means (a) any bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar Laws affecting the rights and remedies of creditors generally and (b) the exercise of judicial or administrative discretion in accordance with general equitable principles, particularly as to the availability of the remedy of specific performance or other injunctive relief.
“CTC Change of Control” means, with respect to the CTC Member: (a) any person (as defined in sections 13(d) and 14(d) of the Exchange Act) other than [***] Controlling the CTC Member; or (b) the sale or other disposition of all or substantially all of the CTC Member’s assets to a business entity (other than a business entity, at least 50% of the combined voting power of the voting securities of which are owned directly or indirectly by the equityholders of the CTC Member as of immediately prior to the sale or disposition, in substantially the same proportion as their ownership of the CTC Member immediately prior to the sale or disposition).
“CTC Competitor” means [***].
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Exhibit A-5
“CTC Directors” is defined in Section 8.2(a)(ii).
“CTC Member” means CTC Property LLC, a Wyoming limited liability company, and its transferees, successors and permitted assignees of Equity Interests (including subsequent transferees, successors and permitted assignees), in each case only if such person is a Member.
“Customer” has the meaning assigned to that term in the Rental Agreement.
“Customer Event of Default” has the meaning assigned to that term in the Rental Agreement.
“Default” means the occurrence and continuation of any of the following events, with respect to a Member: (a) a Contribution Default by such Member or (b) any of the events set forth in clauses (i)-(v) of Section 5.4(d).
“Default Loan” is defined in Section 5.4(b).
“Defaulted Contribution” is defined in Section 5.4(a).
“Defaulting Member” is defined in Section 5.4(a).
“Depreciation” means, for each Allocation Period, an amount equal to the depreciation, amortization or other cost recovery deduction (excluding depletion) allowable for U.S. federal income tax purposes with respect to property for such Allocation Period, except that (a) with respect to any such property the Book Value of which differs from its adjusted tax basis for U.S. federal income tax purposes and which difference is being eliminated by use of the “remedial method” pursuant to Treasury Regulations Section 1.704-3(d), Depreciation for such Allocation Period shall be the amount of book basis recovered for such Allocation Period under the rules prescribed by Treasury Regulations Section 1.704-3(d)(2), and (b) with respect to any other such property the Book Value of which differs from its adjusted tax basis at the beginning of such Allocation Period, Depreciation shall be an amount which bears the same ratio to such beginning Book Value as the U.S. federal income tax depreciation, amortization, or other cost recovery deduction for such Allocation Period bears to such beginning adjusted tax basis; provided, however, that if the adjusted tax basis of any property at the beginning of such Allocation Period is zero dollars ($0.00), Depreciation with respect to such property shall be determined with reference to such beginning value using any reasonable method selected by the Board.
“Designated Individual” means an individual meeting the requirements of Treasury Regulations Sections 301.6223-1(b)(2) and (4) that is appointed as an individual through whom the Partnership Representative will act to the extent required for purposes of subchapter C of chapter 63 of the Code, as provided in Treasury Regulations Section 301.6223-1(b)(3) (and any analogous or similar position or role under relevant state or local Tax Laws).
“Director” is defined in Section 8.1.
“Distributable Cash” means, with respect to any calendar month, the aggregate amount of all cash and cash equivalents of the Company Group received from any and all sources during such calendar month, less all operating and capital expenditures made or incurred by the Company Group during such month, less (a) the Reserve Amount, less (b) any additional amounts in excess of the Reserve Amount reasonably determined by the Operator to be required to fund the budgeted expenses of the Company under the then-current Approved Budgets.
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Exhibit A-6
“Drag-Along Transaction” means any of the following: (a) any consolidation, conversion, merger, division or other business combination involving the Company in which all of the Units held by the Dragging Member are, directly or indirectly, exchanged for or converted into cash, securities of a corporation or other business organization or other property; (b) a sale or transfer of all or substantially all of the assets of the Company; or (c) the Transfer of all or substantially all of the Units held by the Dragging Member, directly or indirectly, in a single transaction or a series of related transactions.
“Dragging Member” is defined in Section 7.8(a).
“Economic Risk of Loss” has the meaning assigned to that term in Treasury Regulations Section 1.752-2(a).
“Effective Date” is defined in the preamble.
“Eligible Units” is defined in Section 7.6(b).
“Emergency Expenditures” means expenditures which the Operator determines in good faith are reasonably necessary to be made in order to mitigate or remedy the imminent or occurring material endangerment of property, the health or safety of any Person, or the environment.
“Encumbering Member” is defined in Section 7.7.
“Enforcement Conflict” is defined in Section 8.4(b).
“Environmental Law” means any and all Laws (excluding common law) pertaining to prevention of pollution, protection of the environment (including natural resources), remediation of contamination or restoration of environmental quality, or workplace health and safety (but only as related to exposure to Hazardous Substances), and all orders, regulations or directives issued by a Governmental Authority to implement any of the foregoing. For purposes of the foregoing definition, “Hazardous Substances” means any substance or material defined, classified or otherwise regulated under applicable Environmental Law as “hazardous,” “toxic,” a “pollutant,” or a “contaminant,” or words of similar meaning and regulatory effect, including petroleum and petroleum products (including crude oil and any fractions thereof), polychlorinated biphenyls, per-and polyfluoroalkyl substances, radioactive materials and friable asbestos.
“Equipment” means, at any time, the equipment and other associated accessories and assets owned by the Company Group at such time of the type that are leased or could be subject to lease pursuant to the terms of the Rental Agreement or any similar agreement.
“Equity Interests” means: (a) capital stock, member interests, partnership interests, other equity interests, rights to profits or revenue and any other similar interest; (b) any security or other interest convertible into or exchangeable or exercisable for any of the foregoing, whether at the time of issuance or upon the passage of time or the occurrence of some future event; and (c) any warrant, option or other right (contingent or otherwise) to acquire any of the foregoing.
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Exhibit A-7
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Excluded Business Opportunity” is defined in Section 8.10(b).
“Excluded Inter-Company Contracts” means the following Inter-Company Contracts: (a) any renewals or extensions of then-existing Inter-Company Contracts on substantially the same terms; (b) any new Inter-Company Contracts on terms substantially the same as similar then-existing contracts, agreements or arrangements of the Company Group; and (c) any contracts, agreements or arrangements entered into in the ordinary course of business on terms no less favorable to the Company Group than could be obtained in an arm’s length transaction with an unrelated Third Party that involve annual consideration payable by the Company Group not in excess of $1,000,000.
“Facility” means [***]’s distribution facility located at [***].
“Fair Market Value” means a good faith determination of the Board of the cash value of specified asset(s) that would be obtained in a negotiated, arm’s-length transaction between an informed and willing buyer and an informed and willing seller, with such buyer and seller being unaffiliated, neither such party being under any compulsion to purchase or sell, and without regard to the particular circumstances of either such party; provided, if in connection with the exercise by either Member of its purchase rights under Section 5.4(d) or Section 7.7, the Members are unable to reach an agreement on the applicable Fair Market Value determination within 30 days of such discussions commencing then, the Member whose interests are subject to purchase shall promptly select three (3) nationally-recognized investment banking firms that have not had a direct or indirect substantial relationship with such Member within the preceding two (2) years and notify the Board thereof. The exercising Member shall promptly select one (1) of such three (3) investment banking firms and notify the Member whose interests are subject to purchase of such selection. The investment banking firm selected as provided above (the “Independent Advisor”) shall promptly determine the Fair Market Value. The Independent Advisor shall render its decision within twenty (20) Business Days (or as promptly thereafter as possible) and such decision shall be final and binding upon the parties. If the Fair Market Value determined by the Independent Advisor exceeds the Board’s determination of Fair Market Value by more than 10.00%, then the purchasing Member shall pay 100% of the fees and expenses of retaining the Independent Advisor; otherwise, the Member whose interests are subject to purchase shall pay 100% of the fees and expenses of retaining the Independent Advisor.
“Fiscal Year” means the fiscal year of the Company, which shall end on December 31st of each calendar year unless, for U.S. federal income tax purposes, another fiscal year is required. The Company shall have the same fiscal year for U.S. federal income tax purposes and for accounting purposes.
“Fundamental Actions” means the following actions by the Company or any other member of the Company Group: (a) entering into any written agreement the terms of which impose non-competition or non-solicitation restrictions on any Defaulting Member; (b) changing, for U.S.
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Exhibit A-8
federal income tax purposes, the classification of any member of the Company Group; (c) requiring any Defaulting Member to make additional Capital Contributions other than with respect to Required Capital Contributions; (d) entering into, terminating, amending or modifying, or waiving any material right under, any Inter-Company Contract, other than any Excluded Inter-Company Contract; (e); making any distribution other than in accordance with the allocation provided under Section 6.1(b) or Section 12.2, as applicable; (f) redeeming any Series A Units held by the Members other than on a pro rata basis; (g) dissolving the Company or agreeing to continue the existence of the Company in accordance with Section 12.1; and (g) entering into any agreement or otherwise committing to do any of the foregoing.
“GAAP” means U.S. generally accepted accounting principles.
“Governmental Authority” means any federal, state, local or foreign government (or department thereof), agency, board, commission, court of competent jurisdiction or other governmental or regulatory authority or instrumentality.
“Inclusion Right” is defined in Section 7.6(b).
“Independent Advisor” is defined in the definition of Fair Market Value herein.
“Initial Budget” is defined in Section 8.5(a).
“Inter-Company Contract” means any oral or written contract, agreement, transaction or arrangement between the Company or any member of the Company Group, on the one hand, and the Operator, any Member(s) or any of their Affiliates, on the other hand, including the Management Agreement and the Rental Agreement.
“Law” means any applicable constitutional provision, statute, act, code (including the Code), law, regulation, rule, ordinance, order, decree, ruling, proclamation, resolution, judgment, decision, declaration, or interpretative or advisory opinion or letter of a domestic, foreign or international Governmental Authority or any political subdivision thereof and shall include, for the avoidance of doubt, the TBOC.
“Lease Compensation” has the meaning assigned to that term in the Rental Agreement.
“Lease Rate” has the meaning assigned to that term in the Rental Agreement.
“Lessor” has the meaning assigned to that term in the Rental Agreement.
“Lessor Event of Default” has the meaning assigned to that term in the Rental Agreement.
“Liquidation Event” is defined in Section 12.1(a).
“Management Agreement” means that certain Agreement for Shared Management Services, by and between the Company and the Operator, dated as of the date hereof, and attached hereto as Exhibit D, as amended or supplemented from time to time.
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Exhibit A-9
“Member” means any Person (but not any Affiliate or other Person in which such Person has an Equity Interest) executing this Agreement on the Effective Date or who is hereafter admitted to the Company as a member of the Company as provided in this Agreement, but such term does not include any Person who has ceased to be a member of the Company.
“Member Indemnitees” is defined in Section 9.1(h).
“Member Indemnitors” is defined in Section 9.1(h).
“Member Nonrecourse Debt” has the meaning assigned to the term “partner nonrecourse debt” in Treasury Regulations Section 1.704-2(b)(4).
“Member Nonrecourse Debt Minimum Gain” has the meaning assigned to the term “partner nonrecourse debt minimum gain” in Treasury Regulations Section 1.704-2(i)(2).
“Member Nonrecourse Deduction” has the meaning assigned to the term “partner nonrecourse deduction” in Treasury Regulations Section 1.704-2(i)(1).
“Members’ Schedules” is defined in Section 3.5.
“Minimum Gain” has the meaning assigned to the term “partnership minimum gain” in Treasury Regulations Sections 1.704-2(b)(2) and 1.704-2(d).
“Mobile Energy Rentals” means Mobile Energy Rentals, LLC, a Texas limited liability company.
“Non-Compensatory Option” has the meaning set forth in Treasury Regulations Section 1.721-2(f).
“Non-Defaulting Member” is defined in Section 5.4(b).
“Nonrecourse Deductions” has the meaning assigned to that term in Treasury Regulations Section 1.704-2(b)(1).
“Officers” is defined in Section 8.8(a).
“Operating Budget” means the annual operating expense budget of the Company.
“Operating Loss” is defined in Section 8.5(d).
“Operator” means Solaris Power Solutions Stateline Operating, LLC, a Delaware limited liability company, or any successor or replacement operator pursuant to the Management Agreement.
“Original Agreement” is defined in the recitals.
“Other Lease Compensation” means Lease Compensation other than the Lease Rate.
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Exhibit A-10
“Partnership Representative” has the meaning assigned to such term in Section 6223 of the Code and any Treasury Regulations or other administrative or judicial pronouncements promulgated thereunder (and any analogous or similar position or role under relevant state or local Tax Laws).
“Partnership Tax Audit Rules” means Code Sections 6221 through 6241, as amended, together with any final or temporary Treasury Regulations, Revenue Rulings, and case law interpreting Code Sections 6221 through 6241, as amended (and any analogous or similar provisions under relevant state or local Tax Laws).
“Permitted Overruns” is defined in Section 8.5(d).
“Permitted Transferee” means, with respect to a Member, any Affiliate of such Member that is Controlled by the Ultimate Parent of such Member.
“Person” means any natural person, corporation, limited partnership, general partnership, limited liability company, joint stock company, joint venture, association, company, estate, trust, bank trust company, land trust, business trust, or other organization, whether or not a legal entity, custodian, trustee-executor, administrator, nominee or entity in a representative capacity and any government or agency or political subdivision thereof.
“Profits” or “Losses” means, for each Allocation Period, an amount equal to the Company’s taxable income or loss for such period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments (without duplication):
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Exhibit A-11
“Prohibited Transferee” means, at any time, any Person: (a) listed on any Sanctions-related list of designated or blocked Persons; (b) ordinarily resident in or organized under the Laws of a Sanctioned Country; or (c) controlled by, or of which fifty percent (50%) or more (in the aggregate) is directly or indirectly owned by, any Person or Persons described in the foregoing clauses (a) or (b). For purposes of the foregoing definition, (i) the term “Sanctions” means the sanctions administered or enforced by the United States government, including the U.S. Department of the Treasury’s Office of Foreign Assets Control, the United Nations Security Council or the European Union, and (ii) the term “Sanctioned Country” means a country or territory that is the subject of comprehensive Sanctions.
“Purchased Units” means Units Transferred pursuant to a Tag-Along Sale.
“Rental Agreement” means that certain Amended and Restated Master Equipment Rental Agreement, by and between Mobile Energy Rentals and the CTC Member, dated as of the Effective Date, as modified by that certain Assignment and Assumption Agreement and Consent, by and among Mobile Energy Rentals, the Company and the CTC Member, dated as of the Effective Date, and as further amended, supplemented or otherwise modified from time to time.
“Rental Agreement RO Offer” has the meaning assigned to the term “RO Offer” in the Rental Agreement.
“Rental Order” has the meaning assigned to that term in the Rental Agreement.
“Replacement Rental Agreement” is defined in Section 8.12(a).
“Representatives” is defined in Section 10.4(c).
“Required Capital Call” is defined in Section 5.3(a).
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Exhibit A-12
“Required Expenditures” means, (a) any expenditures (i) the Operator determines are reasonably necessary in order to maintain the assets or properties of the Company Group, and (ii) recommended by Solar Turbines Incorporated or the applicable manufacturer for maintenance of the assets and properties of the Company Group, which amount is expected as of the Effective Date to equal (A) [***] for any PGM 130 turbine engine overhaul, (B) [***] for any T350 turbine heat exchange, (C) [***] for any T350 turbine engine overhaul and (D) [***] for any T350 turbine gear box exchange and (b) with respect to any change in Law applicable to the Company, any expenditures the Operator determines are reasonably necessary in order for the use, ownership or operation of the assets or properties of the Company Group to comply with such change in Law in all material respects.
“Reserve Amount” means the amount of any cash reserves that is necessary or appropriate to (a) provide for the proper conduct of the business of the Company Group (including reserves for expenses, capital expenditures, contingencies and future acquisitions, investments or credit needs of the Company Group), as determined by the Board, or (b) comply with Law or any loan agreement, security agreement, mortgage, debt instrument or other agreement or obligation to which any member of the Company Group is a party or by which any such member is bound or its assets are subject; provided, however, that such reserves shall not equal more than the forthcoming three months of expenses included in the then effective Approved Budgets without Board Approval.
“ROFR Acceptance Notice” is defined in Section 7.5(b).
“ROFR Holder” is defined in Section 7.5(a).
“ROFR Notice” is defined in Section 7.5(a).
“ROFR Offer” is defined in Section 7.5(b).
“ROFR Offer Price” is defined in Section 7.5(b).
“ROFR Offered Units” is defined in Section 7.5(a).
“Securities Act” means the Securities Act of 1933, as amended, and any successor statute thereto and the rules and regulations of the Securities and Exchange Commission promulgated thereunder.
“Selling Member” is defined in Section 7.5(a).
“Series A Units” is defined in Section 3.2(a).
“Series A-1 Units” is defined in Section 3.2(a).
“Series A-2 Units” is defined in Section 3.2(a).
“Sharing Ratio” means, with respect to each Member, as of the time of determination: (a) the number of Series A Units then held by such Member, divided by (b) the total number of Series A Units then issued and outstanding.
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Exhibit A-13
“Solar Turbines Purchase Orders” means, collectively, (a) that certain Purchase Order No. 1185, issued by Mobile Energy Rentals on January 16, 2025 for the purchase of six T350 generator sets from Solar Turbines Incorporated for the aggregate amount of $[***]; (b) that certain Purchase Order No. 1119-A, issued by Mobile Energy Rentals on January 16, 2025 for the purchase of 17 PGM 130 generator sets from Solar Turbines Incorporated for the aggregate amount of $[***]; (c) that certain Purchase Order No. 1191, issued by Mobile Energy Rentals on January 24, 2025 for the purchase of ten T350 generator sets from Solar Turbines Incorporated for the aggregate amount of $[***]; (d) that certain Purchase Order No. 1208, issued by Mobile Energy Rentals on January 24, 2025 for the purchase of 17 PGM 130 catalyst systems from [***] for the aggregate amount of $[***]; and (e) that certain Purchase Order No. 1351, issued by Mobile Energy Rentals on February 24, 2025 for the purchase of 16 Solar Titan 350 SCR/CO catalyst systems from [***] for the aggregate amount of $[***].
“Solaris” means Solaris Energy Infrastructure, Inc., a Delaware corporation, and any successor thereof.
“Solaris Change of Control” means, with respect to the Solaris Member: (a) any person (as defined in sections 13(d) and 14(d) of the Exchange Act) other than Solaris Controlling the Solaris Member; or (b) the sale or other disposition of all or substantially all of the Solaris’ Member’s assets to a business entity (other than a business entity, at least 50% of the combined voting power of the voting securities of which are owned directly or indirectly by the equityholders of the Solaris Member as of immediately prior to the sale or disposition, in substantially the same proportion as their ownership of the Solaris Member immediately prior to the sale or disposition).
“Solaris Competitor” means [***].
“Solaris Directors” is defined in Section 8.2(a)(i).
“Solaris Member” means Solaris Power Solutions Stateline, LLC, a Delaware limited liability company, and its transferees, successors and permitted assignees of Equity Interests (including subsequent transferees, successors and permitted assignees), in each case only if such person is a Member.
“Subject Equipment” is defined in Section 8.12(a).
“Subsidiary” means, with respect to any Person: (a) any corporation, partnership, limited liability company or other entity, a majority of the Equity Interests of which having ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions is at the time owned, directly or indirectly, with power to vote, by such Person or any direct or indirect Subsidiary of such Person; (b) a partnership in which such Person or any direct or indirect Subsidiary of such Person is a general partner; or (c) a limited liability company in which such Person or any direct or indirect Subsidiary of such Person is a managing member or manager.
“Tag Electing Member” is defined in Section 7.6(b).
“Tag Eligible Member” means, other than the Tag Subject Member, any holder of Series A Units that is not a Defaulting Member.
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Exhibit A-14
“Tag Subject Member” is defined in Section 7.6(a).
“Tag Subject Units” is defined in Section 7.6(b).
“Tag Transferee” is defined in Section 7.6(b).
“Tag-Along Offer Notice” is defined in Section 7.6(b).
“Tag-Along Sale” is defined in Section 7.6(a).
“Tax” or “Taxes” means any tax, charge, fee, levy, deficiency or other assessment of whatever kind or nature, including, any net income, gross income, profits, gross receipts, profits, excise, or withholding tax imposed by or on behalf of any government authority, together with any interest, penalties or additions to tax.
“Tax Return” means any return, election, declaration, report, schedule, return, document, opinion or statement, including any amendments or attachments thereof, which are required to be submitted to any Governmental Authority having authority to assess Taxes.
“TBOC” means the Texas Business Organizations Code and any successor statute, as amended from time to time.
“Third Party” means, with respect to any Member, any Person, including any other Member, who is not a Permitted Transferee with respect to such first Member or the original holder of the related interest.
“Third-Party Claim” means any and all judgments, losses, damages, fines, penalties, deficiencies, costs and expenses (including court costs and reasonable out-of-pocket fees and expenses of attorneys, accountants and experts incurred in connection with defending or settling any action) incurred in respect of a claim made by a Third Party (including any Governmental Authority), whether for breach of contract, tort, strict liability, at Law, in equity or otherwise, but excluding any payment owed to a Third Party pursuant to any contractual obligation of the Company Group that is unrelated to any breach or default.
“Third-Party Offer” means a bona fide written offer from a Third Party.
“Third Party Offeror” is defined in Section 7.5(a).
“Transaction Documents” means this Agreement, each agreement attached as an Exhibit (including any exhibit, schedule or other attachment to any Exhibit), the Management Agreement and the Rental Agreement.
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Exhibit A-15
“Transfer,” including the correlative terms “Transferring” and “Transferred,” means any direct or indirect transfer, assignment, sale, gift, inter vivos transfer, pledge, hypothecation, mortgage, or other encumbrance, or any other disposition (whether voluntary or involuntary or by operation of Law) of Equity Interests (or any interest (pecuniary or otherwise) therein or right thereto), including by division or creation of, or conversion to, a “series limited liability company” or “series limited partnership” or similar entity, or by derivative or similar transactions or arrangements whereby a portion or all of the economic interest in, or risk of loss or opportunity for gain with respect to, Equity Interests is transferred or shifted to another Person; provided, that, notwithstanding the foregoing, any such transfer, assignment, sale, gift, pledge, hypothecation, mortgage, encumbrance or other disposition (whether voluntary or involuntary or by operation of Law) of any Equity Interests (or any interest (pecuniary or otherwise) therein or right thereto), including by division or creation of, or conversion to, a “series limited liability company” or “series limited partnership” or similar entity, or by derivative or similar transactions or arrangements, in Solaris Member or CTC Member or in any Person that holds or Controls (directly or indirectly through one or more Persons) Equity Interests in Solaris Member or CTC Member shall not be a Transfer for purposes of this Agreement except to the extent (a) the primary purpose of such transfer is to transfer, directly or indirectly, Equity Interests in the Company held by Solaris Member or CTC Member or (b) the applicable Person(s) that is directly or indirectly transferred was formed for the primary purpose of holding, directly or indirectly, Equity Interests in the Company or a direct or indirect equity interest in the Company is such applicable Person(s) primary asset.
“Treasury Regulations” means the regulations promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Code. All references herein to sections of Treasury Regulations shall include any corresponding provision or provisions of succeeding, similar, substitute proposed or final Treasury Regulations.
“Triggering ROFR Offer” is defined in Section 7.5(a).
“Ultimate Parent” means, with respect to the CTC Member, [***], and, with respect to the Solaris Member, Solaris.
“Units” means a membership interest in the Company representing a functional part of the limited liability company interest in the Company of all the members and shall include Series A Units and any Additional Units established following the Effective Date; provided, however, any series or group of Units issued shall have the relative rights, powers and duties set forth in this Agreement and the equity interest represented by such series or group of Units shall be determined in accordance with such relative rights, powers and duties set forth in this Agreement.
“[***]” means [***], a Nevada corporation, and any successor thereof.
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Exhibit A-16
[INTENTIONALLY OMITTED.]
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Exhibit B-1
STATELINE POWER, LLC
CALL NOTICE
[INTENTIONALLY OMITTED.]
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Exhibit D
[INTENTIONALLY OMITTED.]
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Exhibit D
[INTENTIONALLY OMITTED.]
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Exhibit E
[INTENTIONALLY OMITTED.]
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Schedule I
[INTENTIONALLY OMITTED.]
[INTENTIONALLY OMITTED.]
Stateline Power, LLC
Amended and Restated Limited Liability Company Agreement
Schedule III
Exhibit 10.4
**Portions of this exhibit have been redacted in accordance with Item 601(b)(10) of
Regulation S-K. The information is not material and would cause competitive harm to the
registrant if publicly disclosed. [***] indicates that information has been redacted. **
AMENDED AND RESTATED MASTER EQUIPMENT RENTAL AGREEMENT
THIS AMENDED AND RESTATED MASTER EQUIPMENT RENTAL AGREEMENT (this “Agreement”) is a lease entered into on this 28th day of April, 2025 (the “Effective Date”) by and between, Mobile Energy Rentals, LLC, a Texas limited liability company (“Lessor”) whose address for notice is 9651 Katy Freeway, Suite 300, Houston, TX 77042, or such other address as Lessor may from time to time provide to Customer, in writing, and CTC Property LLC, a Nevada limited liability company (“Customer”) whose address for notice is [***], or such other address as Customer may from time to time provide to Lessor, in writing. Lessor and Customer are, together, the “Parties” and each a “Party”.
WITNESSETH:
WHEREAS, Lessor owns and holds title, or will procure, own and hold title, to certain equipment (such equipment and any associated accessories, as more particularly described in the relevant Rental Order, the “Equipment”) that Customer desires to lease and use for the Rental Order Term (as herein defined) pursuant to a Rental Order (as herein defined);
WHEREAS, each lease term and Equipment lease (“Rental”) under this Agreement shall be specified in a separate rental order form (the “Rental Order”) in the form attached as Exhibit A-1, which must be duly executed by both Parties and is made a part hereof for all purposes; and
WHEREAS, upon the terms and in the events specified herein, Customer has requested from Lessor use of the Equipment upon the terms and conditions described herein and as outlined in the relevant Rental Order;
WHEREAS, the Parties entered into that certain Master Equipment Rental Agreement, dated February 20, 2025 (the “Original Agreement”);
WHEREAS, the Parties now desire to amend and restate the Original Agreement in its entirety to reflect certain modifications to the terms and conditions hereof, as set forth herein;
NOW, THEREFORE, for and in consideration of the mutual promises, covenants and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
| 1. | Rental; Rental Process; and Rental Orders. |
2
| 4. | Agreement Term and Rental Term. |
3
| 6. | Title, Damage, and Warranty. |
4
| 6.04 | Equipment Warranty. |
8.01 OR CUSTOMER’S TERMINATION RIGHTS UNDER SECTION 4, SECTION 13 OR THE APPLICABLE RENTAL ORDER, LESSOR’S SOLE AND EXCLUSIVE OBLIGATION,
AND CUSTOMER’S SOLE AND EXCLUSIVE REMEDY, shall be limited to (i) at Lessor’s option, replacing or repairing the part or parts, or the Equipment, which prove defective in material or workmanship during the applicable Rental Order Term and (ii) either (A) a refund (credited against future Invoices) of the Lease Rate or pro rata portion thereof for the defective Equipment during the period such defective Equipment is not operating due to the breach of this warranty or
(B) if Section 2 of the Additional Terms of the relevant Rental Order applies, the applicable refunds for the reduced performance as set forth therein.
5
| 7. | Return of Equipment at Termination of Agreement or End of Term. |
| 8. | Indemnification. |
6
| (c) | Indemnitor’s violation of applicable laws as such laws relate to the Rental |
or Equipment;
7
| 11. | Taxes. |
| 12. | Assignment, Sublessorship and Change of Control. |
8
9
10
| 16. | Intellectual Property/No License. |
11
| 18. | Miscellaneous Provisions. |
12
(d) masculine, feminine, and neuter forms all include the other, and (e) the word “including” and all similar terms following any statement will not be construed to limit the statement to matters listed after such word or term, whether or not a phrase of non-limitation such as “without limitation” is used.
13
(b) to perfect and evidence the transactions contemplated by this Agreement, and/or (c) otherwise to effectuate in good faith the intent of the parties and the purposes of this Agreement.
14
15
IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year first written above.
LESSOR:CUSTOMER:
Mobile Energy Rentals, LLCCTC Property LLC
By:/s/ Kyle Ramachandran By: /s/ Jared Birchall I, William A. Zartler, certify that:
Name: Kyle Ramachandran
Name: Jared Birchall
Title:
President and CFO
Title: Corp Secretary
16
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
1. I have reviewed this quarterly report on Form 10-Q of Solaris Energy Infrastructure, Inc. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: July 31, 2025
/s/ William A. Zartler |
|
William A. Zartler |
|
Chairman and Chief Executive Officer (Principal Executive Officer) |
|
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Kyle S. Ramachandran, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Solaris Energy Infrastructure, Inc. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: July 31, 2025
/s/ Kyle S. Ramachandran |
|
Kyle S. Ramachandran |
|
President and Chief Financial Officer (Principal Financial Officer) |
|
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002 (SUBSECTIONS (a) AND (b)
OF SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE)
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), I, William A. Zartler, Chairman and Chief Executive Officer of Solaris Energy Infrastructure, Inc. (the “Company”), hereby certify, to my knowledge, that:
(1)the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: |
July 31, 2025 |
|
/s/ William A. Zartler |
|
|
|
William A. Zartler |
|
|
|
Chairman and Chief Executive Officer |
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002 (SUBSECTIONS (a) AND (b)
OF SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE)
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), I, Kyle S. Ramachandran, President and Chief Financial Officer of Solaris Energy Infrastructure, Inc. (the “Company”), hereby certify, to my knowledge, that:
(1)the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: |
July 31, 2025 |
|
/s/ Kyle S. Ramachandran |
|
|
|
Kyle S. Ramachandran |
|
|
|
President and Chief Financial Officer |
AMENDMENT NO. 1 TO
TAX RECEIVABLE AGREEMENT
This AMENDMENT NO. 1 (this “Amendment”), dated as of June 27, 2023, to that certain Tax Receivable Agreement, dated as of May 17, 2017 (the “Agreement”), by and among Solaris Oilfield Infrastructure, Inc., a Delaware corporation (the “Corporate Taxpayer”), the TRA Holders and the Agents. Capitalized terms used but not defined herein have the meanings given such terms in the Agreement.
WHEREAS, the Corporate Taxpayer, the TRA Holders and the Agents are parties to the Agreement;
WHEREAS, the Agreement utilizes the London Interbank Offered Rate (“LIBOR”) for certain purposes, including the determination of the Agreed Rate, the Default Rate and the Early Termination Rate, and the administrator of LIBOR intends to discontinue publishing LIBOR;
WHEREAS, the U.S. Congress enacted the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”) as part of the Consolidated Appropriations Act, 2022 (Pub. L. 117-103), and the LIBOR Act, among other things, sets forth benchmark replacement rates for legacy contracts governed by U.S. law that reference LIBOR and that do not provide for the use of a clearly defined or practicable replacement benchmark rate when LIBOR is discontinued;
WHEREAS, the Board of Governors of the Federal Reserve System (the “Federal Reserve”) has promulgated final regulations (the “LIBOR Regulations”) that, among other things, carry out the LIBOR Act and set forth the benchmark replacement rate that would replace LIBOR in the Agreement following June 30, 2023;
WHEREAS, pursuant to Section 7.7 of the Agreement, the Agreement may be amended with the written approval of each of the Corporate Taxpayer and the Majority TRA Holders; and
WHEREAS, the parties to the Agreement desire to amend the Agreement to replace the use of LIBOR in the Agreement with the use of the benchmark replacement rate that, under the LIBOR Act and the LIBOR Regulations, would otherwise replace LIBOR in the Agreement following June 30, 2023.
NOW THEREFORE, in consideration of the foregoing and the covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:
“CME Term SOFR” means, during any period, an interest rate per annum equal to the CME Term SOFR Reference Rates for a 12-month tenor, as published by the CME Term SOFR Administrator at approximately 5:00 a.m. U.S. Central Standard Time on the date two (2) calendar days prior to the first day of such period, plus 71.513 basis points.
“CME Term SOFR Administrator” means CME Group Benchmark Administration Limited as administrator of the forward-looking term Secured Overnight Financing Rate (SOFR) (or a successor administrator).
[Remainder of Page Left Intentionally Blank]
IN WITNESS WHEREOF, the Corporate Taxpayer and the Majority TRA Holders have duly executed this Amendment as of the date first written above.
CORPORATE TAXPAYER:
SOLARIS OILFIELD INFRASTRUCTURE, INC.
/s/ Kyle S. Ramachandran |
Kyle S. Ramachandran |
President and Chief Financial Officer |
MAJORITY TRA HOLDERS:
YORKTOWN EERGY PARTNERS X, L.P.
By: Yorktown X Company LP, its general partner
By: Yorktown X Associates LLC, its general partner
/s/ W. Howard Keenan, Jr. |
W. Howard Keenan, Jr. |
Member |
SOLARIS ENERGY CAPITAL, LLC.
/s/ William A. Zartler |
William A. Zartler |
Manager |
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