- GAAP and adjusted EPS for the quarter of $0.57 and $0.64 per
diluted share, respectively
- Revenue increased 7% sequentially due to strong customer
demand and improved pricing
- Net income increased 41% sequentially
- Adjusted EBITDA increased 20% sequentially
- Oil & Gas segment contribution margin increased 16%
sequentially
- Industrial & Specialty Products segment contribution
margin increased 7% sequentially
- Amended and restated $1.1
billion Credit Agreement and extinguished $109 million of debt in March
KATY,
Texas, April 27, 2023 /PRNewswire/ -- U.S. Silica
Holdings, Inc. (NYSE: SLCA) (the "Company"), a diversified
industrial minerals company and the leading last-mile logistics
provider to the oil and gas industry, today announced net income of
$44.6 million, or $0.57 per diluted share, for the first quarter
ended March 31, 2023. The first
quarter results were impacted by $7.0
million pre-tax, or $0.07 per
diluted share after-tax, of charges primarily related to the loss
on extinguishment of debt and business optimization costs,
resulting in adjusted EPS (a non-GAAP measure) of $0.64 per diluted share.
These results compared with a net income of $31.6 million, or $0.40 per diluted share, for the fourth quarter
of 2022, which were impacted by $2.7
million pre-tax, or $0.03 per
diluted share after-tax, of charges primarily related to merger and
acquisition related expenses and business optimization costs,
partially offset by the gain on extinguishment of debt, resulting
in adjusted EPS (a non-GAAP measure) of $0.43 per diluted share.
Bryan Shinn, Chief Executive
Officer, commented, "We delivered exceptional results in the first
quarter, reporting record Adjusted EBITDA and the highest level of
total contribution margin dollars since 2018. Customer demand in
our Oil and Gas segment remained robust and we improved pricing and
expanded margins. Our Industrial and Specialty Products segment
profitability increased 13% on a year-over-year basis through price
increases and greater sales of higher-margin products. We also
successfully entered into a new $1.1
billion Credit Agreement in the first quarter and
concurrently extinguished $109
million of debt, further strengthening our balance
sheet.
We expect to remain effectively sold out for sand proppant in
2023 supported by robust contractual commitments at 84% of
production capacity. Our SandBox last mile logistics offering is
also in strong demand and poised for another year of record
profitability. In our Industrial and Specialty Products segment, we
are commercializing new products, realizing benefits from
structural cost reductions and price increases and continuing to
sign favorable long-term contracts.
Based on the strength of our business so far this year, coupled
with the visibility provided by our customer contracts and market
feedback, we are raising our guidance and now expect 2023 company
Adjusted EBITDA to increase 25% to 30% sequentially with associated
free cash flow generation in excess of $200
million."
First Quarter 2023 Highlights
Total Company
- Revenue of $442.2 million for the
first quarter of 2023 increased 7% compared with $412.9 million in the fourth quarter of 2022 and
increased 45% when compared with the first quarter of 2022.
- Net income of $44.6 million for
the first quarter of 2023 increased 41% compared with $31.6 million in the fourth quarter of 2022 and
increased significantly when compared with a net loss of
$8.4 million in the first quarter of
2022.
- Overall tons sold of 4.934 million for the first quarter of
2023 increased 7% compared with 4.606 million tons sold in the
fourth quarter of 2022 and increased 19% when compared with the
first quarter of 2022.
- Contribution margin of $152.8
million for the first quarter of 2023 increased 14% compared
with $134.4 million in the fourth
quarter of 2022 and increased 85% when compared with the first
quarter of 2022.
- Adjusted EBITDA of $124.6 million
for the first quarter of 2023 increased 20% compared with
$104.2 million in the fourth quarter
of 2022 and increased 136% when compared with the first quarter of
2022.
Oil & Gas
- Revenue of $300.0 million for the
first quarter of 2023 increased 10% when compared with $273.7 million in the fourth quarter of 2022 and
increased 70% when compared with the first quarter of 2022.
- Tons sold of 3.921 million for the first quarter of 2023
increased 10% compared with 3.568 million tons sold in the fourth
quarter of 2022 and increased 28% when compared with the first
quarter of 2022.
- Segment contribution margin of $109.9
million, or $28.03 per ton,
increased 16% when compared with $94.4
million in the fourth quarter of 2022 and increased 146%
when compared with the first quarter of 2022.
Industrial & Specialty Products (ISP)
- Revenue of $142.2 million for the
first quarter of 2023 increased 2% compared with $139.2 million in the fourth quarter of 2022 and
increased 11% when compared with the first quarter of 2022.
- Tons sold of 1.013 million for the first quarter of 2023
decreased 2% compared with 1.038 million tons sold in the fourth
quarter of 2022 and decreased 6% when compared with the first
quarter of 2022.
- Segment contribution margin of $42.9
million, or $42.38 per ton,
for the first quarter of 2023 increased 7% compared with
$40.0 million in the fourth quarter
of 2022 and increased 13% when compared with the first quarter of
2022.
Capital Update
As of March 31, 2023, the Company had $139.5 million in cash and cash equivalents and
total debt was $910.6 million. The
Company's $150.0 million Revolver had
zero drawn, with $21.3 million
allocated for letters of credit, and availability of $128.7 million. During the first quarter of 2023,
the Company generated $40.9 million
in cash flow from operations and capital expenditures in the first
quarter totaled $18.9 million.
Outlook and Guidance
Looking forward to the second quarter, the Company's two
business segments remain well positioned in their respective
markets. The Company has a strong portfolio of industrial and
specialty products that serve numerous essential, high growth and
attractive end markets, supported by a robust pipeline of new
products under development. The Company also expects growth in its
underlying base business, coupled with pricing increases and
surcharges to continue to fight inflationary impacts.
The oil and gas industry is progressing through a multi-year
growth cycle. Constructive customer sentiment and strength in WTI
crude oil prices are supportive of an active well completions
environment in 2023.
The Company remains focused on generating free cash flow and
de-levering the balance sheet. It expects to produce significant
operating cash flow in 2023, and projects investing at the high-end
of capital expenditures guidance of $50-$60 million for
the year.
Conference Call
U.S. Silica will host a conference call for investors tomorrow,
April 28, 2023 at 7:30 a.m. Central
Time to discuss these results. Hosting the call will be
Bryan Shinn, Chief Executive Officer
and Don Merril, Executive Vice
President and Chief Financial Officer. Investors are invited to
listen to a live webcast of the conference call by visiting the
"Investors- Events & Presentations" section of the Company's
website at www.ussilica.com. The webcast will be archived for one
year. The call can also be accessed live over the telephone by
dialing (877) 869-3847 or for international callers, (201)
689-8261. A replay will be available shortly after the call and can
be accessed by dialing (877) 660-6853 or for international callers,
(201) 612-7415. The conference ID for the replay is 13738042. The
replay will be available through May 28,
2023.
About U.S. Silica
U.S. Silica Holdings, Inc. is a global performance materials
company and is a member of the Russell 2000. The Company is a
leading producer of commercial silica used in the oil and gas
industry and in a wide range of industrial applications. Over its
123-year history, U.S. Silica has developed core competencies in
mining, processing, logistics and materials science that enable it
to produce and cost-effectively deliver over 600 diversified
products to customers across our end markets. U.S. Silica's
wholly-owned subsidiaries include EP Minerals and SandBox
Logistics™. EP Minerals is an industry leader in the production of
products derived from diatomaceous earth, perlite, engineered
clays, and non-activated clays. SandBox Logistics™ is a
state-of-the-art leader in proppant storage, handling and well-site
delivery, dedicated to making proppant logistics cleaner, safer and
more efficient. The Company has 27 operating mines and processing
facilities and two additional exploration stage properties across
the United States and is
headquartered in Katy, Texas.
Forward-looking Statements
This first quarter 2023 earnings release, as well as other
statements we make, contain "forward-looking statements" within the
meaning of the federal securities laws - that is, statements about
the future, not about past events. Forward-looking statements give
our current expectations and projections relating to our financial
condition, results of operations, plans, objectives, future
performance and business. These statements may include words such
as "anticipate," "estimate," "expect," "project," "plan," "intend,"
"believe," "may," "will," "should," "could," "can have," "likely"
and other words and terms of similar meaning. Forward-looking
statements made include any statement that does not directly relate
to any historical or current fact and may include, but are not
limited to, statements regarding U.S. Silica's estimated and
projected costs and cost reduction programs, reserves and finished
products estimates, growth opportunities, strategy, future
financial results, forecasts, projections, plans and capital
expenditures, technological innovations, and the expected outcome
or impact of pending or threatened litigation. Forward-looking
statements are based on our current expectations and assumptions,
which may not prove to be accurate. These statements are not
guarantees and are subject to risks, uncertainties and changes in
circumstances that are difficult to predict. Many factors
could cause actual results to differ materially and adversely from
these forward-looking statements. Among these factors are global
economic conditions; heightened levels of inflation and rising
interest rates; supply chain and logistics constraints for our
company and our customers, fluctuations in demand for commercial
silica, diatomaceous earth, perlite, clay and cellulose;
fluctuations in demand for frac sand or the development of either
effective alternative proppants or new processes to replace
hydraulic fracturing; the entry of competitors into our
marketplace; changes in production spending by companies in the oil
and gas industry and changes in the level of oil and natural gas
exploration and development; changes in oil and gas inventories;
general economic, political and business conditions in key regions
of the world including the ongoing conflict between Russia and Ukraine; the effect of the COVID-19 pandemic
on markets the Company serves; pricing pressure; cost inflation;
weather and seasonal factors; the cyclical nature of our customers'
business; our inability to meet our financial and performance
targets and other forecasts or expectations; our substantial
indebtedness and pension obligations, including restrictions on our
operations imposed by our indebtedness; operational modifications,
delays or cancellations; prices for electricity, natural gas and
diesel fuel; our ability to maintain our transportation network;
changes in government regulations and regulatory requirements,
including those related to mining, explosives, chemicals, and oil
and gas production; silica-related health issues and corresponding
litigation; and other risks and uncertainties detailed in this
press release and our most recent Forms 10-K, 10-Q, and 8-K filed
with or furnished to the U.S. Securities and Exchange Commission.
If one or more of these or other risks or uncertainties materialize
(or the consequences of such a development changes), or should
underlying assumptions prove incorrect, actual outcomes may vary
materially from those reflected in our forward-looking
statements. The forward-looking statements speak only as of
the date hereof, and we disclaim any intention or obligation to
update publicly or revise such statements, whether as a result of
new information, future events or otherwise.
U.S. SILICA
HOLDINGS, INC. SELECTED FINANCIAL DATA FROM CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited; dollars
in thousands, except per share amounts)
|
|
|
Three Months
Ended
|
|
March 31,
2023
|
|
December 31,
2022
|
|
March 31,
2022
|
Total sales
|
$
442,240
|
|
$ 412,934
|
|
$
304,887
|
Total cost of sales
(excluding depreciation, depletion and
amortization)
|
293,133
|
|
282,904
|
|
226,869
|
Operating
expenses:
|
|
|
|
|
|
Selling, general and
administrative
|
29,163
|
|
34,978
|
|
40,110
|
Depreciation,
depletion and amortization
|
35,386
|
|
33,202
|
|
37,749
|
Total operating
expenses
|
64,549
|
|
68,180
|
|
77,859
|
Operating
income
|
84,558
|
|
61,850
|
|
159
|
Other (expense)
income:
|
|
|
|
|
|
Interest
expense
|
(24,061)
|
|
(22,821)
|
|
(17,173)
|
Other (expense)
income, net, including interest income
|
(2,352)
|
|
3,437
|
|
1,531
|
Total other
expense
|
(26,413)
|
|
(19,384)
|
|
(15,642)
|
Income (loss) before
income taxes
|
58,145
|
|
42,466
|
|
(15,483)
|
Income tax (expense)
benefit
|
(13,573)
|
|
(10,950)
|
|
6,969
|
Net income
(loss)
|
$
44,572
|
|
$
31,516
|
|
$
(8,514)
|
Less: Net loss
attributable to non-controlling interest
|
(76)
|
|
(74)
|
|
(121)
|
Net income (loss)
attributable to U.S. Silica Holdings,
Inc.
|
$
44,648
|
|
$
31,590
|
|
$
(8,393)
|
|
|
|
|
|
|
Earnings (loss) per
share attributable to U.S. Silica Holdings, Inc.:
|
|
|
|
|
|
Basic
|
$
0.58
|
|
$
0.42
|
|
$
(0.11)
|
Diluted
|
$
0.57
|
|
$
0.40
|
|
$
(0.11)
|
Weighted average shares
outstanding:
|
|
|
|
|
|
Basic
|
76,517
|
|
75,711
|
|
75,240
|
Diluted
|
78,292
|
|
78,026
|
|
75,240
|
Dividends declared per
share
|
$
—
|
|
$
—
|
|
$
—
|
U.S. SILICA
HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited; dollars in thousands)
|
|
|
March 31,
2023
|
|
December 31,
2022
|
|
|
|
|
ASSETS
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
139,494
|
|
$
280,845
|
Accounts receivable,
net
|
226,395
|
|
208,631
|
Inventories,
net
|
152,419
|
|
147,626
|
Prepaid expenses and
other current assets
|
16,525
|
|
20,182
|
Total current
assets
|
534,833
|
|
657,284
|
Property, plant and
mine development, net
|
1,161,250
|
|
1,178,834
|
Lease right-of-use
assets
|
39,818
|
|
42,374
|
Goodwill
|
185,649
|
|
185,649
|
Intangible assets,
net
|
138,452
|
|
140,809
|
Other assets
|
9,921
|
|
9,630
|
Total
assets
|
$
2,069,923
|
|
$
2,214,580
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
Liabilities:
|
|
|
|
Accounts payable and
accrued expenses
|
$
178,738
|
|
$
216,239
|
Current portion of
operating lease liabilities
|
19,101
|
|
19,773
|
Current portion of
long-term debt
|
13,590
|
|
19,535
|
Current portion of
deferred revenue
|
10,793
|
|
16,275
|
Income tax
payable
|
4,436
|
|
128
|
Total current
liabilities
|
226,658
|
|
271,950
|
Long-term debt,
net
|
897,013
|
|
1,037,458
|
Deferred
revenue
|
14,390
|
|
14,477
|
Liability for pension
and other post-retirement benefits
|
30,476
|
|
30,911
|
Deferred income taxes,
net
|
73,304
|
|
64,636
|
Operating lease
liabilities
|
60,135
|
|
64,478
|
Other long-term
liabilities
|
26,390
|
|
25,976
|
Total
liabilities
|
1,328,366
|
|
1,509,886
|
Stockholders'
Equity:
|
|
|
|
Preferred
stock
|
—
|
|
—
|
Common stock
|
876
|
|
854
|
Additional paid-in
capital
|
1,238,098
|
|
1,234,834
|
Retained
deficit
|
(306,436)
|
|
(351,084)
|
Treasury stock, at
cost
|
(196,116)
|
|
(186,196)
|
Accumulated other
comprehensive loss
|
(2,448)
|
|
(1,723)
|
Total U.S. Silica
Holdings, Inc. stockholders' equity
|
733,974
|
|
696,685
|
Non-controlling
interest
|
7,583
|
|
8,009
|
Total stockholders'
equity
|
741,557
|
|
704,694
|
Total liabilities and
stockholders' equity
|
$
2,069,923
|
|
$
2,214,580
|
Non-GAAP Financial Measures
Segment Contribution Margin
Segment contribution margin is a key metric that management uses
to evaluate our operating performance and to determine resource
allocation between segments. Segment contribution margin excludes
selling, general, and administrative costs, corporate costs, plant
capacity expenses, and facility closure costs.
The following table sets forth a reconciliation of net income
(loss), the most directly comparable GAAP financial measure, to
segment contribution margin.
(All amounts
in thousands)
|
Three Months
Ended
|
|
March 31,
2023
|
|
December 31,
2022
|
|
March 31,
2022
|
Sales:
|
|
|
|
|
|
Oil & Gas
Proppants
|
$
300,013
|
|
$
273,717
|
|
$
176,244
|
Industrial &
Specialty Products
|
142,227
|
|
139,217
|
|
128,643
|
Total sales
|
442,240
|
|
412,934
|
|
304,887
|
Segment contribution
margin:
|
|
|
|
|
|
Oil & Gas
Proppants
|
109,897
|
|
94,437
|
|
44,753
|
Industrial &
Specialty Products
|
42,929
|
|
40,004
|
|
37,834
|
Total segment
contribution margin
|
152,826
|
|
134,441
|
|
82,587
|
Operating activities
excluded from segment cost of sales
|
(3,719)
|
|
(4,411)
|
|
(4,569)
|
Selling, general and
administrative
|
(29,163)
|
|
(34,978)
|
|
(40,110)
|
Depreciation, depletion
and amortization
|
(35,386)
|
|
(33,202)
|
|
(37,749)
|
Interest
expense
|
(24,061)
|
|
(22,821)
|
|
(17,173)
|
Other (expense) income,
net, including interest income
|
(2,352)
|
|
3,437
|
|
1,531
|
Income tax (expense)
benefit
|
(13,573)
|
|
(10,950)
|
|
6,969
|
Net income
(loss)
|
$
44,572
|
|
$
31,516
|
|
$
(8,514)
|
Less: Net loss
attributable to non-controlling interest
|
(76)
|
|
(74)
|
|
(121)
|
Net income (loss)
attributable to U.S. Silica Holdings, Inc.
|
$
44,648
|
|
$
31,590
|
|
$
(8,393)
|
Adjusted EBITDA
Adjusted EBITDA is not a measure of our financial performance or
liquidity under GAAP and should not be considered as an alternative
to net income (loss) as a measure of operating performance, cash
flows from operating activities as a measure of liquidity or any
other performance measure derived in accordance with GAAP.
Additionally, Adjusted EBITDA is not intended to be a measure of
free cash flow for management's discretionary use, as it does not
consider certain cash requirements such as interest payments, tax
payments and debt service requirements. Adjusted EBITDA contains
certain other limitations, including the failure to reflect our
cash expenditures, cash requirements for working capital needs and
cash costs to replace assets being depreciated and amortized, and
excludes certain charges that may recur in the future. Management
compensates for these limitations by relying primarily on our GAAP
results and by using Adjusted EBITDA only supplementally. Our
measure of Adjusted EBITDA is not necessarily comparable to other
similarly titled captions of other companies due to potential
inconsistencies in the methods of calculation.
The following table sets forth a reconciliation of net income
(loss), the most directly comparable GAAP financial measure, to
Adjusted EBITDA:
(All amounts in
thousands)
|
Three Months
Ended
|
|
March 31,
2023
|
|
December 31,
2022
|
|
March 31,
2022
|
Net income (loss)
attributable to U.S. Silica Holdings, Inc.
|
$
44,648
|
|
$
31,590
|
|
$
(8,393)
|
Total interest expense,
net of interest income
|
21,568
|
|
21,511
|
|
17,153
|
Provision for
taxes
|
13,573
|
|
10,950
|
|
(6,969)
|
Total depreciation,
depletion and amortization expenses
|
35,386
|
|
33,202
|
|
37,749
|
EBITDA
|
115,175
|
|
97,253
|
|
39,540
|
Non-cash incentive
compensation (1)
|
3,335
|
|
4,875
|
|
4,657
|
Post-employment
expenses (excluding service costs) (2)
|
(839)
|
|
(674)
|
|
(701)
|
Merger and acquisition
related expenses (3)
|
224
|
|
1,495
|
|
1,868
|
Plant capacity
expansion expenses (4)
|
66
|
|
86
|
|
46
|
Contract termination
expenses (5)
|
—
|
|
—
|
|
6,500
|
Business optimization
projects (6)
|
956
|
|
648
|
|
11
|
Facility closure costs
(7)
|
81
|
|
303
|
|
490
|
Other adjustments
allowable under the Credit Agreement (8)
|
5,637
|
|
170
|
|
492
|
Adjusted
EBITDA
|
$
124,635
|
|
$
104,156
|
|
$
52,903
|
(1)
|
Reflects equity-based
and other equity-related compensation expense.
|
(2)
|
Includes net pension
cost and net post-retirement cost relating to pension and other
post-retirement benefit obligations during the applicable period,
but in each case excluding the service cost relating to benefits
earned during such period. Non-service net periodic benefit costs
are not considered reflective of our operating performance because
these costs do not exclusively originate from employee services
during the applicable period and may experience periodic
fluctuations as a result of changes in non-operating factors,
including changes in discount rates, changes in expected returns on
benefit plan assets, and other demographic actuarial
assumptions.
|
(3)
|
Merger and acquisition
related expenses include legal fees, professional fees, bank fees,
severance costs, and other employee related costs. While these
costs are not operational in nature and are not expected to
continue for any singular transaction on an ongoing basis, similar
types of costs, expenses and charges have occurred in prior periods
and may recur in the future as we continue to integrate prior
acquisitions and pursue any future acquisitions.
|
(4)
|
Plant capacity
expansion expenses include expenses that are not inventoriable or
capitalizable as related to plant expansion projects greater than
$5 million in capital expenditures or plant start up
projects. While these expenses are not operational in nature
and are not expected to continue for any singular project on an
ongoing basis, similar types of expenses have occurred in prior
periods and may recur in the future if we continue to pursue future
plant capacity expansion.
|
(5)
|
Reflects contract
termination expenses related to strategically exiting a supplier
service contract. While these expenses are not operational in
nature and are not expected to continue for any singular event on
an ongoing basis, similar types of expenses have occurred in prior
periods and may recur in the future as we continue to strategically
evaluate our contracts.
|
(6)
|
Reflects costs incurred
related to business optimization projects within our corporate
center, which aim to measure and improve the efficiency,
productivity and performance of our organization. While these costs
are not operational in nature and are not expected to continue for
any singular project on an ongoing basis, similar types of expenses
may recur in the future.
|
(7)
|
Reflects costs incurred
related to idled sand facilities and closed corporate offices,
including severance costs and remaining contracted costs such as
office lease costs, maintenance, and utilities. While these costs
are not operational in nature and are not expected to continue for
any singular event on an ongoing basis, similar types of expenses
may recur in the future.
|
(8)
|
Reflects miscellaneous
adjustments permitted under the Credit Agreement, such as
recruiting fees and relocation costs. The three months ended March
31, 2023 also included costs related to severance restructuring of
$0.8 million, an adjustment to non-controlling interest of $0.2
million and $5.3 million related to the loss on extinguishment of
debt, offset by an insurance recovery of $0.8 million. The three
months ended December 31, 2022 also included restructuring
severance of $0.8 million and an adjustment to non-controlling
interest of $0.2 million, offset by the gain on extinguishment of
debt of $1.2 million. The three months ended March 31, 2022 also
included costs related to weather events and supplier and
logistical issues of $0.8 million, severance restructuring of $0.1
million, an adjustment to non-controlling interest of $0.1 million,
partially offset by proceeds of the sale of assets of $0.5
million.
|
Forward-looking Non-GAAP Measures
A reconciliation of Adjusted EBITDA and free cash flow
generation as used in our guidance, each of which is a
forward-looking non-GAAP financial measure, to the most directly
comparable GAAP financial measure, is not provided because the
Company is unable to provide such reconciliation without
unreasonable effort. The inability to provide each reconciliation
is due to the unpredictability of the amounts and timing of events
affecting the items we exclude from the non-GAAP measure.
U.S. Silica Holdings, Inc.
Investor Contact
Patricia
Gil
Vice President, Investor Relations & Sustainability
(281) 505-6011
gil@ussilica.com
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SOURCE U.S. Silica Holdings, Inc.