Solaris Energy Infrastructure, Inc.SEI
Solaris Energy Infrastructure, Inc. Fair Value Disclosure
Fair Value Measurements and Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company measures or discloses fair value in accordance with ASC 820, Fair Value Measurement, which establishes a fair value hierarchy that prioritizes the inputs to valuation techniques into three broad levels. The hierarchy gives the highest priority to observable inputs and the lowest priority to unobservable inputs. The three levels are defined 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.
Recurring Fair Value Measurements
The Company has no financial assets or liabilities measured at fair value on a recurring basis as of December 31, 2025 or 2024.
Nonrecurring Fair Value Measurements
The Company’s nonrecurring fair value measurements primarily relate to assets acquired and liabilities assumed in connection with business combinations completed in 2025 and 2024. These assets and liabilities were recorded at their estimated fair values as of the respective acquisition dates.
The fair value measurements were determined using valuation techniques appropriate for the nature of the assets and liabilities and involved significant unobservable inputs. Accordingly, these measurements are classified within Level 3 of the fair value hierarchy. See Note 4., “Business Combinations” for additional information regarding valuation methodologies.
Financial Instruments Not Measured at Fair Value on a Recurring Basis
The carrying amounts of certain financial instruments not measured at fair value approximate their fair values due to their short-term nature or other characteristics, as follows:
•Cash, accounts receivable, accounts payable, accrued liabilities, and other current liabilities (including insurance premium financing) - These approximate fair value primarily because of their short maturities.
•Outstanding borrowings under variable-rate debt arrangements - These approximate fair value as the effective interest rates reset periodically to reflect current market rates.
•Finance and operating lease obligations - These approximate fair value as the incremental borrowing rates used to measure the liabilities approximate current market rates for similar obligations.
The Convertible Notes are carried at amortized cost. The related fair values together with the carrying amounts are disclosed in Note 12, “Convertible Notes”.
Credit Risk
The financial instruments that are subject to concentrations of credit risk mainly include cash and cash equivalents and trade receivables.
The Company maintains cash and cash equivalents with various financial institutions. As of December 31, 2025 and 2024, the Company’s cash and cash equivalents (including restricted cash in 2024) totaled $353.3 million and $159.9 million, respectively. These balances are held in accounts that exceed the insured limits set by the Federal Deposit
Insurance Corporation, per institution. The Company monitors the financial health of these institutions on an ongoing basis and has not experienced any losses related to these deposits.
The majority of our accounts receivable have payment terms of 60 days or less. As of December 31, 2025, two customers accounted for 38% and 18% 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.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 5, 2025 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.