- GAAP and adjusted EPS for the quarter of $0.29 and $0.32 per
diluted share, respectively
- Revenue increased 27% sequentially due to strong customer
demand
- Adjusted EBITDA increased 77% sequentially
- Oil & Gas segment contribution margin increased 73%
sequentially
- Industrial & Specialty Products segment contribution
margin increased 21% sequentially
- Repurchased $100 million of
debt at a discount to par using cash on hand in July
KATY,
Texas, July 29, 2022 /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
$22.9 million, or $0.29 per diluted share, for the second quarter
ended June 30, 2022. The second
quarter results were negatively impacted by $2.4 million pre-tax, or $0.03 per diluted share after-tax, of charges
primarily related to merger and acquisition related expense and
facility closure costs, resulting in adjusted EPS (a non-GAAP
measure) of $0.32 per diluted
share.
These results compared with a net loss of $8.4 million, or $0.11 per diluted share, for the first quarter of
2022, which 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 expenses,
resulting in an adjusted loss of $0.02 per diluted share.
Bryan Shinn, Chief Executive
Officer, commented, "We delivered an exceptional second quarter
with outstanding sales volume, revenue, earnings and cash
generation across the company. By capitalizing on the
strength in our underlying markets and improved operational
efficiencies, we generated a 77% sequential increase in adjusted
EBITDA, and $88 million of cash flow
from operations. We continued to experience robust customer
demand during the quarter and implemented numerous price increases
and surcharges across both business units to fight inflationary
impacts. In addition, I am extremely proud of our organization's
execution during the second quarter as we creatively improved
international logistics performance, increased plant outputs and
delivered world class safety performance.
"In our Oil & Gas segment, the supply and demand balance in
the sand and last mile logistics market remains very tight and we
were effectively sold out due to strong well completion demand,
particularly in West Texas. During
the second quarter, we took advantage of operational efficiency
gains at key mine sites to maximize production and our sand and
SandBox sales prices and margins continued to move higher. Given
the expectation for a multi-year energy up cycle, customers have
been determined to secure sand supply and are signing attractive
multi-year contracts, including paying cash up front.
"In our Industrial & Specialty Products segment, demand
remained strong across end market segments. The transitory seasonal
issues we experienced in the first quarter were resolved and we
realized a very strong rebound in the second quarter, driven by
price increases and surcharges across all major product lines to
combat inflation, improved product mix, and greater operational
efficiencies from initiatives such as leveraging alternate shipping
ports and packaging automation.
"During the first half of 2022, our businesses generated
significant profitability and levels of free cash flow that
afforded us the ability to opportunistically repurchase
$100 million of debt at a discount to
par using cash on hand earlier this month. Given that we expect
continued meaningful free cash flow generation in the second half
of 2022, we anticipate further reductions in our net debt, and are
forecasting continued positive momentum in the third
quarter."
Second Quarter 2022 Highlights
Total Company
- Revenue of $388.5 million for the
second quarter of 2022 increased 27% compared with $304.9 million in the first quarter of 2022 and
increased 22% when compared with the second quarter of 2021.
- Overall tons sold of 4.652 million for the second quarter of
2022 increased 13% compared with 4.134 million tons sold in the
first quarter of 2022 and increased 13% when compared with the
second quarter of 2021.
- Contribution margin of $123.3
million for the second quarter of 2022 increased 49%
compared with $82.6 million in the
first quarter of 2022 and increased 55% when compared with the
second quarter of 2021 after excluding the $48.9 million customer settlement.
- Adjusted EBITDA of $93.8 million
for the second quarter of 2022 increased 77% compared with
$52.9 million in the first quarter of
2022 and increased 72% when compared with the second quarter of
2021 after excluding the $48.9
million customer settlement.
Oil & Gas
- Revenue of $244.2 million for the
second quarter of 2022 increased 39% when compared with
$176.2 million in the first quarter
of 2022 and increased 26% when compared with the second quarter of
2021.
- Tons sold of 3.528 million for the second quarter of 2022
increased 15% compared with 3.060 million tons sold in the first
quarter of 2022 and increased 17% when compared with the second
quarter of 2021.
- Segment contribution margin of $77.4
million, or $21.93 per ton,
increased 73% when compared with $44.8
million in the first quarter of 2022 and increased 129% when
compared with the second quarter of 2021 after excluding the
$48.9 million customer
settlement.
Industrial & Specialty Products (ISP)
- Revenue of $144.3 million for the
second quarter of 2022 increased 12% compared with $128.6 million in the first quarter of 2022 and
increased 16% when compared with the second quarter of 2021.
- Tons sold of 1.124 million for the second quarter of 2022
increased 5% when compared with 1.074 million tons sold in the
first quarter of 2022 and increased 4% when compared with the
second quarter of 2021.
- Segment contribution margin of $45.9
million, or $40.85 per ton,
for the second quarter of 2022 increased 21% compared with
$37.8 million in the first quarter of
2022 and was flat when compared with the second quarter of
2021.
Capital Update
As of June 30, 2022, the Company had $312.4 million in cash and cash equivalents and
total debt was $1.205 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 second quarter of 2022,
the Company generated $88.1 million
in cash flow from operations and capital expenditures in the second
quarter totaled $10.5
million.
Outlook and Guidance
Looking forward to the third quarter and second half of 2022,
the Company's two business segments remain well positioned for
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
growth in its underlying base business and pricing increases and
surcharges to continue to fight inflationary impacts.
The oil and gas industry is progressing through what is
anticipated to be a multi-year growth cycle. Strength in both WTI
crude oil and natural gas prices are promising for an active well
completions environment throughout the second half of 2022 and into
2023.
The Company remains focused on generating 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,
July 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 13731716. The
replay will be available through August 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 has 28 operating mines and
processing facilities and is headquartered in Katy, Texas.
Forward-looking Statements
This second 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
|
|
June 30,
2022
|
|
March 31,
2022
|
|
June 30,
2021
|
|
Total sales
|
$
388,513
|
|
$
304,887
|
|
$
317,301
|
|
Total cost of sales
(excluding depreciation, depletion and amortization)
|
268,896
|
|
226,869
|
|
192,955
|
|
Operating
expenses:
|
|
|
|
|
|
|
Selling, general and
administrative
|
34,817
|
|
40,110
|
|
27,509
|
|
Depreciation,
depletion and amortization
|
34,715
|
|
37,749
|
|
41,165
|
|
Goodwill and other
asset impairments
|
—
|
|
—
|
|
—
|
|
Total operating
expenses
|
69,532
|
|
77,859
|
|
68,674
|
|
Operating
income
|
50,085
|
|
159
|
|
55,672
|
|
Other (expense)
income:
|
|
|
|
|
|
|
Interest
expense
|
(17,430)
|
|
(17,173)
|
|
(17,918)
|
|
Other income
(expense), net, including interest income
|
2,099
|
|
1,531
|
|
(186)
|
|
Total other
expense
|
(15,331)
|
|
(15,642)
|
|
(18,104)
|
|
Income (loss) before
income taxes
|
34,754
|
|
(15,483)
|
|
37,568
|
|
Income tax (expense)
benefit
|
(11,919)
|
|
6,969
|
|
(11,666)
|
|
Net income
(loss)
|
$
22,835
|
|
$
(8,514)
|
|
$
25,902
|
|
Less: Net loss
attributable to non-controlling interest
|
(73)
|
|
(121)
|
|
(126)
|
|
Net income (loss)
attributable to U.S. Silica Holdings, Inc.
|
$
22,908
|
|
$
(8,393)
|
|
$
26,028
|
|
|
|
|
|
|
|
Earnings (loss) per
share attributable to U.S. Silica Holdings, Inc.:
|
|
|
|
|
|
|
Basic
|
$
0.30
|
|
$
(0.11)
|
|
$
0.35
|
|
Diluted
|
$
0.29
|
|
$
(0.11)
|
|
$
0.34
|
|
Weighted average shares
outstanding:
|
|
|
|
|
|
|
Basic
|
75,508
|
|
75,240
|
|
74,339
|
|
Diluted
|
77,966
|
|
75,240
|
|
76,136
|
|
Dividends declared per
share
|
$
—
|
|
$
—
|
|
$
—
|
|
U.S. SILICA
HOLDINGS, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited; dollars
in thousands)
|
|
|
June 30,
2022
|
|
December 31,
2021
|
|
|
|
|
|
ASSETS
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
312,379
|
|
$
239,425
|
|
Accounts receivable,
net
|
225,110
|
|
202,759
|
|
Inventories,
net
|
133,371
|
|
115,713
|
|
Prepaid expenses and
other current assets
|
13,393
|
|
18,018
|
|
Total current
assets
|
684,253
|
|
575,915
|
|
Property, plant and
mine development, net
|
1,208,738
|
|
1,258,646
|
|
Lease right-of-use
assets
|
46,138
|
|
42,241
|
|
Goodwill
|
185,649
|
|
185,649
|
|
Intangible assets,
net
|
145,484
|
|
150,054
|
|
Other assets
|
8,849
|
|
7,095
|
|
Total
assets
|
$
2,279,111
|
|
$
2,219,600
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
Current
Liabilities:
|
|
|
|
|
Accounts payable and
accrued expenses
|
$
200,945
|
|
$
167,670
|
|
Current portion of
operating lease liabilities
|
16,843
|
|
14,469
|
|
Current portion of
long-term debt
|
14,232
|
|
18,285
|
|
Current portion of
deferred revenue
|
14,131
|
|
4,247
|
|
Income tax
payable
|
2,177
|
|
1,200
|
|
Total current
liabilities
|
248,328
|
|
205,871
|
|
Long-term debt,
net
|
1,190,327
|
|
1,193,135
|
|
Deferred
revenue
|
22,151
|
|
16,494
|
|
Liability for pension
and other post-retirement benefits
|
31,974
|
|
32,935
|
|
Deferred income taxes,
net
|
46,569
|
|
44,774
|
|
Operating lease
liabilities
|
71,161
|
|
75,130
|
|
Other long-term
liabilities
|
34,167
|
|
37,178
|
|
Total
liabilities
|
1,644,677
|
|
1,605,517
|
|
Stockholders'
Equity:
|
|
|
|
|
Preferred
stock
|
—
|
|
—
|
|
Common stock
|
852
|
|
845
|
|
Additional paid-in
capital
|
1,226,484
|
|
1,218,575
|
|
Retained
deficit
|
(414,745)
|
|
(429,260)
|
|
Treasury stock, at
cost
|
(186,826)
|
|
(186,294)
|
|
Accumulated other
comprehensive (loss) income
|
(281)
|
|
349
|
|
Total U.S. Silica
Holdings, Inc. stockholders' equity
|
625,484
|
|
604,215
|
|
Non-controlling
interest
|
8,950
|
|
9,868
|
|
Total stockholders'
equity
|
634,434
|
|
614,083
|
|
Total liabilities and
stockholders' equity
|
$
2,279,111
|
|
$
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 income
(loss), the most directly comparable GAAP financial measure, to
segment contribution margin.
|
(All amounts
in thousands)
|
Three Months
Ended
|
|
June 30,
2022
|
|
March 31,
2022
|
|
June 30,
2021
|
|
Sales:
|
|
|
|
|
|
|
Oil & Gas
Proppants
|
$
244,246
|
|
$
176,244
|
|
$
193,298
|
|
Industrial &
Specialty Products
|
144,267
|
|
128,643
|
|
124,003
|
|
Total sales
|
388,513
|
|
304,887
|
|
317,301
|
|
Segment contribution
margin:
|
|
|
|
|
|
|
Oil & Gas
Proppants
|
77,353
|
|
44,753
|
|
82,676
|
|
Industrial &
Specialty Products
|
45,915
|
|
37,834
|
|
45,939
|
|
Total segment
contribution margin
|
123,268
|
|
82,587
|
|
128,615
|
|
Operating activities
excluded from segment cost of sales
|
(3,651)
|
|
(4,569)
|
|
(4,269)
|
|
Selling, general and
administrative
|
(34,817)
|
|
(40,110)
|
|
(27,509)
|
|
Depreciation, depletion
and amortization
|
(34,715)
|
|
(37,749)
|
|
(41,165)
|
|
Interest
expense
|
(17,430)
|
|
(17,173)
|
|
(17,918)
|
|
Other income (expense),
net, including interest income
|
2,099
|
|
1,531
|
|
(186)
|
|
Income tax (expense)
benefit
|
(11,919)
|
|
6,969
|
|
(11,666)
|
|
Net income
(loss)
|
$
22,835
|
|
$
(8,514)
|
|
$
25,902
|
|
Less: Net loss
attributable to non-controlling interest
|
(73)
|
|
(121)
|
|
(126)
|
|
Net income (loss)
attributable to U.S. Silica Holdings, Inc.
|
$
22,908
|
|
$
(8,393)
|
|
$
26,028
|
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
|
|
June 30,
2022
|
|
March 31,
2022
|
|
June 30,
2021
|
|
Net income (loss)
attributable to U.S. Silica Holdings, Inc.
|
$
22,908
|
|
$
(8,393)
|
|
$
26,028
|
|
Total interest expense,
net of interest income
|
17,278
|
|
17,153
|
|
17,902
|
|
Provision for
taxes
|
11,919
|
|
(6,969)
|
|
11,666
|
|
Total depreciation,
depletion and amortization expenses
|
34,715
|
|
37,749
|
|
41,165
|
|
EBITDA
|
86,820
|
|
39,540
|
|
96,761
|
|
Non-cash incentive
compensation (1)
|
5,295
|
|
4,657
|
|
3,954
|
|
Post-employment
expenses (excluding service costs) (2)
|
(744)
|
|
(701)
|
|
363
|
|
Merger and acquisition
related expenses (3)
|
2,089
|
|
1,868
|
|
109
|
|
Plant capacity
expansion expenses (4)
|
49
|
|
46
|
|
19
|
|
Contract termination
expenses (5)
|
—
|
|
6,500
|
|
—
|
|
Business optimization
projects (6)
|
—
|
|
11
|
|
4
|
|
Facility closure costs
(7)
|
440
|
|
490
|
|
490
|
|
Other adjustments
allowable under the Credit Agreement (8)
|
(163)
|
|
492
|
|
1,586
|
|
Adjusted
EBITDA
|
$
93,786
|
|
$
52,903
|
|
$
103,286
|
|
|
|
|
(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.
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(3)
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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)
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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.
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(5)
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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.
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(6)
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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.
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(7)
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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.
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(8)
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Reflects miscellaneous
adjustments permitted under the Credit Agreement, such as
recruiting fees and relocation costs. The three and six months
ended June 30, 2022 also included costs related to weather events
and supplier and logistical issues of $0.9 million, severance
restructuring of $0.2 million, an adjustment to non-controlling
interest of $0.3 million, partially offset by proceeds of the sale
of assets of $1.0 million. The three and six months ended June 30,
2021 also included $1.8 million related to expenses incurred with
severe winter storms during the first quarter, costs related to a
power interruption at a plant location of $0.5 million, 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.