- Loss for the quarter of $0.11
per basic and diluted share and adjusted loss of $0.02 per basic and diluted share
- Revenue increased 7% sequentially due to strong customer
demand
- Adjusted EBITDA increased 26% sequentially
- Oil & Gas segment contribution margin increased 49%
sequentially
KATY,
Texas, April 29, 2022 /PRNewswire/ -- U.S. Silica
Holdings, Inc. (NYSE: SLCA), a diversified industrial minerals
company and the leading last-mile logistics provider to the oil and
gas industry (the "Company"), today announced a net loss of
$8.4 million, or $0.11 per diluted share, for the first quarter
ended March 31, 2022. The first
quarter results were negatively impacted by $9.4 million pre-tax, or $0.09 per diluted share after-tax, of charges
primarily related to a supplier contract termination and merger and
acquisition related expense, resulting in an adjusted loss of
$0.02 per diluted share.
These results compared with a net loss of $19.0 million, or $0.25 per diluted share, for the fourth quarter
of 2021, which were negatively impacted by $3.5 million pre-tax, or $0.03 per diluted share after-tax, of charges
primarily related to merger and acquisition related expense and
other adjustments, resulting in an adjusted loss of $0.22 per basic and diluted share.
Bryan Shinn, Chief Executive
Officer, commented, "We started 2022 with a very strong quarter,
delivering sequential improvements of 7% in total revenue and 26%
in adjusted EBITDA. Macros were very favorable, with continued
robust customer demand, and we delivered meaningful price increases
across both business units in the quarter. I am pleased to report
that the positive market conditions are continuing, and we expect
to deliver even stronger financial results in the second quarter,
and 2022 overall is shaping up to be a very strong year for profits
and cash generation.
"In our Oil & Gas segment, sand and logistics remained
effectively sold out due to strong well completion demand,
particularly in West Texas. Our
teams worked diligently with customers to minimize disruptions and
well site downtime given the overwhelming market demand. The supply
and demand balance in the sand and last mile logistics market
remains very tight, and we have experienced increased operating
costs to serve customers. As a result, sand and SandBox sales
prices and margins have risen substantially and we continue to sign
attractive new contracts.
"In our Industrial & Specialty Products segment, demand
remained strong across end uses and market segments. As we
mentioned on last quarter's call, strong winter storms negatively
impacted a few of our operations during the quarter resulting in
higher costs, delayed shipments and less favorable product sales
mix. These were transitory issues and we expect a very strong
rebound in the second quarter. In addition, we are proactively
offsetting West Coast shipping challenges by utilizing alternate
ports across the U.S. and anticipate an improved product mix
coupled with the phase-in of additional price increases in the
second quarter. Given these actions, we expect the second quarter
to be one of the strongest quarters on record for our Industrial
segment and we believe that first half 2022 Industrial &
Specialty Products profitability will be on or slightly ahead of
plan."
First Quarter 2022 Highlights
Total Company
- Revenue of $304.9 million for the
first quarter of 2022 increased 7% compared with $284.9 million in the fourth quarter of 2021 and
increased 30% when compared with the first quarter of 2021.
- Overall tons sold of 4.134 million for the first quarter of
2022 decreased 1% compared with 4.181 million tons sold in the
fourth quarter of 2021 and increased 16% when compared with the
first quarter of 2021.
- Contribution margin of $82.6
million for the first quarter of 2022 increased 15% compared
with $71.6 million in the fourth
quarter of 2021 and increased 34% when compared with the first
quarter of 2021.
- Adjusted EBITDA of $52.9 million
for the first quarter of 2022 increased 26% compared with
$42.1 million in the fourth quarter
of 2021 and increased 38% when compared with the first quarter of
2021.
Industrial & Specialty Products (ISP)
- Revenue of $128.6 million for the
first quarter of 2022 increased 2% compared with $126.3 million in the fourth quarter of 2021, and
increased 14% when compared with the first quarter of 2021.
- Tons sold of 1.074 million for the first quarter of 2022
decreased 1% when compared with 1.085 million tons sold in the
fourth quarter of 2021 and increased 9% when compared with the
first quarter of 2021.
- Segment contribution margin of $37.8
million, or $35.23 per ton,
for the first quarter of 2022 decreased 9% compared with
$41.5 million in the fourth quarter
of 2021 and decreased 6% when compared with the first quarter of
2021.
Oil & Gas
- Revenue of $176.2 million for the
first quarter of 2022 increased 11% when compared with $158.6 million in the fourth quarter of 2021 and
increased 45% when compared with the first quarter of 2021.
- Tons sold of 3.060 million for the first quarter of 2022
decreased 1% compared with 3.096 million tons sold in the fourth
quarter of 2021 and increased 19% when compared with the first
quarter of 2021.
- Segment contribution margin of $44.8
million, or $14.63 per ton,
increased 49% when compared with $30.1
million in the fourth quarter of 2021 and increased 108%
when compared with the first quarter of 2021.
Capital Update
As of March 31, 2022, the Company had $239.8 million in cash and cash equivalents and
total debt was $1.208 billion. The
Company's $100.0 million Revolver had
zero drawn, with $21.6 million
allocated for letters of credit, and availability of $78.4 million. During the first quarter of 2022,
the Company generated $15.1 million
in cash flow from operations and capital expenditures in the first
quarter totaled $7.0
million.
Outlook and Guidance
Looking forward to the second quarter and second half of 2022,
the Company's two business segments remain well positioned for
contribution margin expansion and growth 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 as well as pricing increases and
surcharges.
The oil and gas industry is progressing through what is
anticipated to be a multi-year growth cycle. Strength in commodity
prices, both WTI crude oil and natural gas prices, along with
forecasted increases in customer spending, are promising for an
active well completions environment throughout 2022.
The Company remains focused on free cash flow and de-levering
the balance sheet and intends on being operating cash flow positive
in 2022, keeping an estimated $40-$60 million of
capital expenditures within operating cash flow.
Conference Call
U.S. Silica will host a conference call for investors today,
April 29, 2022 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
13728925. The replay will be available through May 29, 2022.
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 122-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 currently operates 24 mines and
production facilities and is headquartered in Katy, Texas.
Forward-looking Statements
This first quarter 2022 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 growth
opportunities, strategy, future financial results, forecasts,
projections, plans and capital expenditures, technological
innovations, the impacts of COVID-19 on the Company's operations,
and the commercial silica industry. 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; the effect of the COVID-19 pandemic on markets the
Company serves; 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; 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,
2022
|
|
December 31,
2021
|
|
March 31,
2021
|
Total sales
|
$
304,887
|
|
$
284,864
|
|
$
234,416
|
Total cost of sales (excluding
depreciation, depletion and amortization)
|
226,869
|
|
217,591
|
|
176,989
|
Operating
expenses:
|
|
|
|
|
|
Selling, general and administrative
|
40,110
|
|
34,939
|
|
26,224
|
Depreciation, depletion and amortization
|
37,749
|
|
38,637
|
|
41,348
|
Goodwill and other asset impairments
|
—
|
|
153
|
|
38
|
Total operating
expenses
|
77,859
|
|
73,729
|
|
67,610
|
Operating income
(loss)
|
159
|
|
(6,456)
|
|
(10,183)
|
Other (expense)
income:
|
|
|
|
|
|
Interest expense
|
(17,173)
|
|
(17,732)
|
|
(17,711)
|
Other income, net, including interest income
|
1,531
|
|
1,147
|
|
2,605
|
Total other expense
|
(15,642)
|
|
(16,585)
|
|
(15,106)
|
Loss before income
taxes
|
(15,483)
|
|
(23,041)
|
|
(25,289)
|
Income tax
benefit
|
6,969
|
|
3,927
|
|
4,354
|
Net loss
|
$
(8,514)
|
|
$
(19,114)
|
|
$
(20,935)
|
Less: Net loss
attributable to non-controlling interest
|
(121)
|
|
(98)
|
|
(157)
|
Net loss attributable
to U.S. Silica Holdings, Inc.
|
$
(8,393)
|
|
$
(19,016)
|
|
$
(20,778)
|
|
|
|
|
|
|
Loss per share
attributable to U.S. Silica Holdings, Inc.:
|
|
|
|
|
|
Basic
|
$
(0.11)
|
|
$
(0.25)
|
|
$
(0.28)
|
Diluted
|
$
(0.11)
|
|
$
(0.25)
|
|
$
(0.28)
|
Weighted average shares
outstanding:
|
|
|
|
|
|
Basic
|
75,240
|
|
74,598
|
|
73,927
|
Diluted
|
75,240
|
|
74,598
|
|
73,927
|
Dividends declared per
share
|
$
—
|
|
$
—
|
|
$
—
|
U.S. SILICA
HOLDINGS, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
Unaudited; dollars
in thousands)
|
|
|
March 31, 2022
|
|
December 31, 2021
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
239,768
|
|
$
239,425
|
|
|
|
Accounts receivable, net
|
198,835
|
|
202,759
|
|
|
|
Inventories, net
|
123,784
|
|
115,713
|
|
|
|
Prepaid expenses and other current assets
|
14,525
|
|
18,018
|
|
|
|
Total current assets
|
576,912
|
|
575,915
|
|
|
|
Property, plant and
mine development, net
|
1,228,071
|
|
1,258,646
|
|
|
|
Lease right-of-use
assets
|
41,751
|
|
42,241
|
|
|
|
Goodwill
|
185,649
|
|
185,649
|
|
|
|
Intangible assets,
net
|
147,694
|
|
150,054
|
|
|
|
Other assets
|
7,620
|
|
7,095
|
|
|
|
Total assets
|
$
2,187,697
|
|
$
2,219,600
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
$
162,970
|
|
$
167,670
|
|
|
|
Current portion of operating lease liabilities
|
13,158
|
|
14,469
|
|
|
|
Current portion of long-term debt
|
16,303
|
|
18,285
|
|
|
|
Current portion of deferred revenue
|
2,643
|
|
4,247
|
|
|
|
Income tax payable
|
8,866
|
|
1,200
|
|
|
|
Total current
liabilities
|
203,940
|
|
205,871
|
|
|
|
Long-term debt,
net
|
1,191,980
|
|
1,193,135
|
|
|
|
Deferred
revenue
|
16,491
|
|
16,494
|
|
|
|
Liability for pension
and other post-retirement benefits
|
28,843
|
|
32,935
|
|
|
|
Deferred income taxes,
net
|
30,388
|
|
44,774
|
|
|
|
Operating lease
liabilities
|
71,355
|
|
75,130
|
|
|
|
Other long-term
liabilities
|
33,906
|
|
37,178
|
|
|
|
Total liabilities
|
1,576,903
|
|
1,605,517
|
|
|
|
Stockholders' Equity:
|
|
|
|
|
|
|
Preferred
stock
|
—
|
|
—
|
|
|
|
Common stock
|
851
|
|
845
|
|
|
|
Additional paid-in
capital
|
1,222,780
|
|
1,218,575
|
|
|
|
Retained
deficit
|
(437,641)
|
|
(429,260)
|
|
|
|
Treasury stock, at
cost
|
(188,092)
|
|
(186,294)
|
|
|
|
Accumulated other
comprehensive income
|
3,502
|
|
349
|
|
|
|
Total U.S. Silica Holdings, Inc. stockholders'
equity
|
601,400
|
|
604,215
|
|
|
|
Non-controlling
interest
|
9,394
|
|
9,868
|
|
|
|
Total stockholders' equity
|
610,794
|
|
614,083
|
|
|
|
Total liabilities and
stockholders' equity
|
$
2,187,697
|
|
$
2,219,600
|
|
|
|
|
|
|
|
|
|
|
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 (loss)
income, the most directly comparable GAAP financial measure, to
segment contribution margin.
(All amounts
in thousands)
|
Three Months
Ended
|
|
March 31,
2022
|
|
December 31,
2021
|
|
March 31,
2021
|
Sales:
|
|
|
|
|
|
Oil
& Gas Proppants
|
$
176,244
|
|
$
158,606
|
|
$
121,697
|
Industrial & Specialty Products
|
128,643
|
|
126,258
|
|
112,719
|
Total sales
|
304,887
|
|
284,864
|
|
234,416
|
Segment contribution
margin:
|
|
|
|
|
|
Oil
& Gas Proppants
|
44,753
|
|
30,114
|
|
21,540
|
Industrial & Specialty Products
|
37,834
|
|
41,518
|
|
40,038
|
Total segment contribution
margin
|
82,587
|
|
71,632
|
|
61,578
|
Operating activities
excluded from segment cost of sales
|
(4,569)
|
|
(4,359)
|
|
(4,151)
|
Selling, general and
administrative
|
(40,110)
|
|
(34,939)
|
|
(26,224)
|
Depreciation, depletion
and amortization
|
(37,749)
|
|
(38,637)
|
|
(41,348)
|
Goodwill and other
asset impairments
|
—
|
|
(153)
|
|
(38)
|
Interest
expense
|
(17,173)
|
|
(17,732)
|
|
(17,711)
|
Other income, net,
including interest income
|
1,531
|
|
1,147
|
|
2,605
|
Income tax
benefit
|
6,969
|
|
3,927
|
|
4,354
|
Net loss
|
$
(8,514)
|
|
$
(19,114)
|
|
$
(20,935)
|
Less: Net loss
attributable to non-controlling interest
|
(121)
|
|
(98)
|
|
(157)
|
Net loss attributable to U.S. Silica Holdings,
Inc.
|
$
(8,393)
|
|
$
(19,016)
|
|
$
(20,778)
|
|
|
|
|
|
|
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,
2022
|
|
December 31,
2021
|
|
March 31,
2021
|
Net loss attributable
to U.S. Silica Holdings, Inc.
|
$
(8,393)
|
|
$
(19,016)
|
|
$
(20,778)
|
Total interest expense,
net of interest income
|
17,153
|
|
17,690
|
|
15,803
|
Provision for
taxes
|
(6,969)
|
|
(3,927)
|
|
(4,354)
|
Total depreciation,
depletion and amortization expenses
|
37,749
|
|
38,637
|
|
41,348
|
EBITDA
|
39,540
|
|
33,384
|
|
32,019
|
Non-cash incentive
compensation (1)
|
4,657
|
|
5,714
|
|
4,574
|
Post-employment
expenses (excluding service costs) (2)
|
(701)
|
|
(506)
|
|
363
|
Merger and acquisition
related expenses (3)
|
1,868
|
|
2,154
|
|
194
|
Plant capacity
expansion expenses (4)
|
46
|
|
86
|
|
41
|
Contract termination
expenses (5)
|
6,500
|
|
—
|
|
—
|
Goodwill and other
asset impairments (6)
|
—
|
|
153
|
|
38
|
Business optimization
projects (7)
|
11
|
|
28
|
|
39
|
Facility closure costs
(8)
|
490
|
|
137
|
|
502
|
Other adjustments
allowable under the Credit Agreement (9)
|
492
|
|
962
|
|
546
|
Adjusted EBITDA
|
$
52,903
|
|
$
42,112
|
|
$
38,316
|
|
|
|
(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.
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(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)
|
The three months ended
March 31, 2022, December 31, 2021 and March 31, 2021 reflect
impairment charges of zero, $0.2 million, and $38 thousand,
respectively.
|
(7)
|
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.
|
(8)
|
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.
|
(9)
|
Reflects miscellaneous
adjustments permitted under the Credit Agreement, such as
recruiting fees and relocation costs. 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. The three months ended December 31,2021 also included $0.3
million related to severe winter storms during the first quarter,
$0.2 million of asset losses, $0.2 million of transload shortfalls
and exit fees, $0.1 million for an adjustment to non-controlling
interest and $0.1 million of severance. The three months ended
March 31, 2021 also included $0.8 million related to expenses
incurred with severe winter storms during the first quarter,
partially offset by $0.1 million for a measurement period
adjustment related to the Arrows Up bargain purchase.
|
|
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U.S. Silica Holdings, Inc.
Investor Contact
Patricia
Gil
Vice President, Investor Relations
(281) 505-6011
gil@ussilica.com
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SOURCE U.S. Silica Holdings, Inc.