Solaris Energy Infrastructure (SEI) risk factors, FY2024 10-K

Risks Related to Our Operations and Industry

1. 01The volatility of oil and natural gas prices may adversely affect the demand for our systems, products and services, and negatively impact our results of operations
2. 02Our entry into scaled distributed power solutions is expected to enhance our position as a mobile equipment and logistics solution provider to the industries we service as well as diversify our business
3. 03We face significant competition, as well as the prospect of further consolidation in the industry and amongst current and potential customers, either of which may impede our ability to gain market share or cause us to lose market share, or that could make adoption of new product offerings or services difficult
4. 04Our Power Solutions segment is dependent on our relationships with key suppliers to obtain equipment
5. 05We may be unable to adapt our distributed power technologies to meet increasing customer needs and power loads, which could result in increased downtime of our power generation offering and disruptions to the power supply to our customers
6. 06We expect to face significant competition in the future as the mobile power industry evolves
7. 07Many of our power systems involve long sales cycles
8. 08Our customers may not continue to outsource their power system needs
9. 09Sustained levels of inflation and associated changes in monetary policy may result in increases to the cost of our goods, services and personnel, which in turn could cause our capital expenditures and operating costs to rise
10. 10Changes in U.S. trade policy, including the imposition of tariffs and the resulting consequences, could adversely affect our business, prospects, financial condition and operating results
11. 11Our business is subject to inherent risks some of which are beyond our control such as disasters and extreme or seasonal weather events. These risks may be self-insured or may not be fully covered under our insurance policies
12. 12Reliance upon a few large customers may adversely affect our revenue and operating results
13. 13Events outside of our control, including a pandemic or outbreak of an infectious disease, political unrest, armed conflicts and economic recessions occurring around the globe, could materially adversely affect our business, liquidity, results of operations and financial condition
14. 14Combining our business with MER’s may be more difficult, costly or time-consuming than expected and the combined company may fail to realize the anticipated benefits of the contribution, which may adversely affect the combined company’s business results and negatively affect the value of our Class A common stock
15. 15We may grow through acquisitions and our failure to properly plan and manage those acquisitions may adversely affect our performance
16. 16We engage in transactions with related parties and such transactions present possible conflicts of interest that could have an adverse effect on us
17. 17Our failure to protect our proprietary information and intellectual property rights, or any successful intellectual property challenges or infringement proceedings against us, could result in a loss in our competitive advantage or market share
18. 18Technological advancements in the products and technologies we provide could have a material adverse effect on our business, financial condition and results of operations
19. 19We are subject to cybersecurity risks. A cyber incident could occur and result in information theft, data corruption, operational disruption and/or financial loss
20. 20We rely on a few key employees whose absence or loss could adversely affect our business
21. 21If we are unable to access the services of a sufficient number of skilled and qualified workers, or are required to significantly increase wages to attract or retain such workers, our capacity and profitability could be diminished and our growth potential could be impaired
22. 22We are subject to extensive government laws and regulations concerning our employees, and the cost of compliance with such laws and regulations could be material
23. 23Unsatisfactory safety performance may negatively affect our customer relationships and, to the extent we fail to retain existing customers or attract new customers, adversely impact our revenues

Risks Related to Financial Condition

1. 24Our business depends on domestic capital spending by the industries we service, and reductions in capital spending could have a material adverse effect on our liquidity, results of operations and financial condition
2. 25We may be adversely affected by uncertainty in the global financial markets or the deterioration of the financial condition, and resulting credit risk, of our customers
3. 26Our financing agreements subject us to various financial and other restrictive covenants. These restrictions may limit our operational or financial flexibility and could subject us to potential defaults under our financing agreements
4. 27Our ability to use our net operating loss (“NOL”) carryovers may be limited
5. 28We incurred significant additional indebtedness in connection with the MER Acquisition and may incur additional indebtedness in the future, and such indebtedness may limit our operating or financial flexibility and could subject us to potential defaults under the applicable financing agreements

Risks Related to Regulatory Matters

1. 29We are subject to environmental and occupational health and safety laws and regulations that may expose us to significant costs and liabilities
2. 30Increased attention to environmental, social and governance (“ESG”) matters may impact our business
3. 31Anti-indemnity provisions enacted by many states may restrict or prohibit a party's indemnification of us
4. 32Changes to applicable tax laws and regulations or exposure to additional income tax liabilities could affect our operating results and cash flows

Risks Related to Our Class A Common Stock

1. 33Our stock price could be volatile, and you may not be able to resell shares of your Class A common stock at or above the price you paid
2. 34The market price for our Class A common stock following the closing the MER Acquisition may be affected by factors different from those that historically have affected or currently affect our Class A common stock
3. 35Future sales of our Class A common stock in the public market, or the perception that such sales may occur, could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us
4. 36Holders of our Class A common stock may not receive dividends on our Class A common stock
5. 37Our principal stockholders collectively hold a significant amount of the voting power of our common stock
6. 38Certain of our directors, including our Chairman and Chief Executive Officer, have significant duties with, and spend significant time serving, entities that may or may not compete with us and, accordingly, may have conflicts of interest in allocating time or pursuing business opportunities
7. 39Solaris Inc. will be required to make payments under the Tax Receivable Agreement for certain tax benefits that it may claim, and the amounts of such payments could be significant
8. 40In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits, if any, Solaris Inc. realizes in respect of the tax attributes subject to the Tax Receivable Agreement